Automotive Fleet

SEP 2013

Magazine for the car and truck fleet and leasing industry

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REMARKETING NEW VEHICLES CREATE USED-VEHICLE MARKET 20.0 16.9 15.0 16.0 Millions 16.2 14.5 10.0 10.1 10.3 9.7 5.0 0 Chart 1 11.5 12.75 15.3 9.4 Notes: 1. Numbers for 2013 to 2014 are projections. 2. Inventory trade-in calculations are based on 60 percent of new-car sales. 6.2 2005 2006 2007 2008 2009 With 60 percent of new-vehicle sales bringing a trade-in to the wholesale channel, 2014 estimates show a return to prerecession levels of 2007. The lowest total light-duty sales and trade-in volumes occurred in 2009. 2010 2011 2012 2013 2014 SOURCE: BLACK BOOK USA Q Estimated Trade-in Volume (millions) Q U.S. Light-Duty Sales (millions) industry transparency, and will then show up as another opportunity. Since the 2008 economic recession, the positive movement in the market has made heroes out of remarketers while creating the challenges for those remarketers of tomorrow. Risk analysts must understand there is currently a changing used market with even more adjustment coming. Now that the Seasonally Adjusted Annual Rate (SAAR) has climbed consistently to about 15.3 million, the supply of used vehicles into the market in 2013 is increasing and we are not too far from prerecession levels. With Black Book expecting new-car sales levels to hit 16 million in 2014, we will be just short of prerecession levels for new sales and ultimately used market volume levels and values. and from the auction or lot, and also necessary reconditioning. Black Book continues to see more and more vehicles purchased sight unseen, or at least only "seen" through an online condition report. Tis enables a vehicle to be ofered to more potential buyers and, in some cases, ofered even before it is taken out of service (with a feet or as a rental unit). Reporting the market values has evolved signifcantly over time to now include the traditional physical and emerging electronic lanes . Te speed in changing the market values is almost expected to be instantaneous as there is more transparency in the wholesale market activity and market values than ever before. Tere still remain opportunities for arbitrage, but many of those opportunities disappear quickly due to the Reviewing Past Trends When looking at used vehicles currently in the three- to six-year-old vehicle age group, the more recent depreciation should bring a big "thank you" for the eforts of the feet remarketing specialists, but not the hero status of 2011 and 2012. In almost every view one takes comparing the 2012 and 2013 calendar years , depreciation is greater than more recent time periods. Annual depreciation from Aug. 1, 2011, to Aug. 1, 2012, represented a very strong market of only -12.1 percent. For the same time period in 2012 to 2013 that change was slightly higher at -13.4 percent. For a three month period of May 1, 2012 to Aug. 1, 2012/2013, the change was -3.4 percent in 2012 and -3.6 percent in 2013. When looking at a solid used market, no Chart 2 COMPARING ANNUAL & QUARTERLY DEPRECIATION LEVELS: THREE-YEAR-OLD VEHICLES 3-MONTH COMPARISON 12-MONTH COMPARISON 20,166 19,000 18,500 17,455 [-13.4%] 17,500 17,000 16,500 16,000 8/1/12 8/1/13 SOURCE: BLACK BOOK USA Average Values ($) 19,500 18,000 18,112 18,000 17,800 17,600 17,455 [-3.6%] 17,400 17,200 17,000 5/1/12 8/1/13 Most recent annual and quarterly depreciation shows increased levels over 2011 and 2012, but still less than the prerecession levels. 20 AUTOMOTIVE FLEET I SEPTEMBER 2013 SOURCE: BLACK BOOK USA 20,000 Average Values ($) 20,500 18,200

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