Last updated Friday, September 12, 2008

The current used vehicle market has stabilized in many segments due largely to a general lack of supply and some moderation of fuel prices. The scarcity of product is largely due to a decrease in dealer consignment vehicles at auction due to a slump in new vehicle sales and a resulting lack of trade-ins as well as the willingness of many dealers to keep for retail vehicles they would formerly have deemed unsuitable for their lots. One of our auction consultants told us that one auction bigwig confided that while every successive sale seemed to set a new record for dealers in attendance, each sale also saw a similarly unprecedented lack of inventory for sale. Were it not for the sluggish economy and the seasonal decline we usually experience at this time of year we might expect to see a really robust market. As it is, we are seeing some general stability in what is usually a deteriorating market.

Specifically, those mid and full size SUVs and pick-ups that were almost unsalable in previous weeks are actually attracting some attention among dealers and apparently among consumers as well. The other side of the coin is that some of those economy cars that have seen an uptick during what are normally very sluggish summer months are beginning to experience some minor erosion. Those few vehicles, mostly hybrids, that have experienced significant increases in value over the past few months are coming back to reality. We think you will see some significant declines in cars such as the Toyota Prius and Honda Civic Hybrids over the next few weeks.

Scarcity has moderated the decline of sport coupes and convertibles recently and that trend will probably continue. The one segment that seems to have continued its relatively steep decline is the Asian and European luxury vehicle contingent. Supply still seems to be overwhelming demand in much of that market.

While we are certainly glad to see some relative stability in what has been a very difficult market to stay abreast of, we remain cautious for the future. It is, after all, almost October, after which of course comes November and December, traditionally weak months in the wholesale calendar. Scarcity of product, however, may very well moderate the severity of declines we are used to seeing over the next few months.

Dan Galves