Last updated Friday, March 23, 2007
The market appears to have attained a rare degree of stability for a change. Apparently a lack of product has done what in the past was largely the result of consumer demand fueled by better weather and optimistic thinking, creating a semblance of an actual “spring market”. Remember what that is?
I don’t want to get overly enthusiastic because by the time this missive gets in your hands, so to speak, it may be over. But for the time being, at least, most segments are either stable or on the rise. Even that most downtrodden of segments, the European luxury group, has slowed in its descent.
As I said, much of the strength seems to be the result of “slim pickin’s”. In many cases manufacturers’ conscious efforts to reduce fleet inventories and lease returns has had the intended result: create some scarcity of product and thereby increase resale values. Domestic cars are among the greatest benefactors of this strategy. Reduced manufacturer inventory combined with the relative scarcity of domestic trades because of the relative scarcity of domestic new car sales (and perhaps some general recognition of significant improvement in the quality of domestics and their ability to age well) has created relative strength in that segment. I say relative because domestic cars still lag way behind most of their import competitors in the resale department, but improvement is improvement and that market is stable or, in some cases, actually rising.
Those segments that do have a fair amount of product in the pipeline and have experienced some unusual depreciation this year – I’m thinking primarily of Toyota and Honda cars – seem to have stabilized some as well. Dropping them on a regular basis has been an unusual experience, to say the least. Their difficulties clearly illustrate the relevance of the law of supply-and-demand in the used vehicle marketplace. I don’t think they have lost any popularity or consumer confidence, I just think there are too many of them available as a result of their sales’ success as new vehicles. A problem most manufacturers would like to have.
Full size pick-ups are doing quite well if they are well-equipped. We have noticed that ¾ ton and 1 ton series seem to have appreciated recently and you will see some evidence of that in the pricing. The same goes for some of the more popular trim level packages: XLT, Lariat, LT, Z71, etc. will experience a bump-up in value. Smaller pick-ups which have softened slightly in the recent past seem to have stabilized.
Of course it is spring and convertibles and sport coupes have generally increased in value but, for the most part, are not experiencing a “feeding frenzy”.
It’s nice to see some stability in what has been an unusually prolonged falling market in most vehicle segments. Let’s hope, for all of us (it hasn’t made our job any easier), it lasts a while.