NADA UCG: Independents Facing Big Challenges in Used-Car Acquisition
In a market where wholesale auction volume is even tighter than overall used supply, independent dealers face an especially “tough situation” when it comes to acquiring the vehicles they need on their lots, suggested Jonathan Banks, a senior analyst with NADA Used Car Guide.
In his Used Car & Truck Blog, Banks points out that wholesale auction volume in 2011 has fallen 10 percent from 2010, compared to about a 2-percent drop of overall used supply. What’s more, for compact cars, the total used supply has actually increased 5 percent, while the auction volume is actually down 16 percent.
“Since most of the 35,000 independent auto dealers rely heavily on traditional brick-and-mortar auctions for their inventory, they are faced with an environment of very tight supply which exceeds the market as a whole,” Banks pointed out.
“What makes this situation more interesting is that strong demand for used models contributes to lower supply at the auctions,” he added. “This occurs because more used vehicles are being acquired farther upstream of traditional auctions by the franchised new-car dealer.”
Franchised dealers, of course, typically have more expansive avenues for used-vehicle acquisition. They are privy to increased trade-in volume via new and used sales, first dibs (after the lessee) on buying end-of-term lease vehicles and the online marketplaces of their respective OEMs or captives that give them first crack at used units before they trickle downstream into auctions, Banks explained.
“In most cases, this removes a large majority of pristine condition, low-mileage vehicles from the traditional auction channel, which correspondingly changes the mix of vehicles available,” he noted.
“The result is an increase in prices for all used vehicles, particularly those vehicles sold at a physical auction,” he added. “This is even true for models that may have been considered undesirable in the past.”
Going forward, it is likely that the rest of 2011 and 2012 will continue to see drop-offs in used supply, according to NADA.
Banks also noted that data from the Conference Board and CNW Research points to robust demand for used vehicles, as well.
“In addition, gross profit margins for used vehicles are (approximately) 9 percent higher than on new vehicles, according to NADA’s Dealership Financial Report, and most franchise dealerships have made considerable investments to improve the used-vehicle buying experience,” Banks pointed out.
Nada Used Truck Prices - News
In his Used Car & Truck Blog, Banks points out that wholesale auction volume in 2011 has fallen 10 percent from 2010, compared to about a 2-percent drop of overall used supply. What's more, for compact cars, the total used supply has actually increased
NADA UCG pointed out these trends are a reversal from what the industry witnessed last year as used-car prices lagged behind used-truck price appreciation. In an attempt to provide guidance on this question, Banks took a closer look at how prices have
Consumers can look up their used car's value online at sites like nadaguides.com, which is operated by NADA. Kelley Blue Book's site, kbb.com, and Edmunds.com are also helpful, experts say. Taylor said high prices "should persist as long as the economy
Bandera resident Tony Dankowski, left, speaks with Ancira Chevrolet salesman Joe Idar about a used Nissan truck that he is interested in buying June 3, 2011. According to Ancira Kia general manager Jason Thompson, used car prices have
At the same time, though, buyers of used cars can expect to see sticker prices as much as 30 percent higher this month compared with a year ago. That kind of jump "really is unprecedented," said Jonathan Banks, executive auto analyst for NADA.
Weary Dealers Could Catch a Break « WorldDealer Inc
Dealers today are facing tough times: fuel prices are high, and wholesale prices are making a steady inventory of used vehicles difficult to maintain. Yet good news may be on the way for dealerships, as Autoremarketing reports.
The excerpts below are taken from Autoremarketing.com – view the full article in its original location here .
Weary Dealers Could Finally See Relief from Rising Gas Prices, Tight Fuel-Efficient InventoryMay 19, 2011 | IRVINE, Calif.
By Staff Writer Nick Zulovich
Wednesday.Arca elaborated about how two crucial dealership variables are tightening tremendously — wholesale supply especially of compact models and used-vehicle retail margins as prices climb more toward new-vehicle levels.
Financial data from the National Automobile Dealers Association back up Arca’s assertion. March figures show gross profit as a percentage of a used-vehicle’s price slid from 14.23 percent down to 12.96 percent year-over-year. That drop left dealers getting $2.149 in gross profit per used unit in March, down from $2,222 a year earlier.
Arca also mentioned how lot managers are asking themselves the same questions repeatedly. Are gas prices ever going to fall back? Is that compact sedan worth the extra $1,000 at auction to get it on the front line?
“At auction, dealers are in a very competitive bidding environment,” Arca went on to share with Auto Remarketing . “There are so many dealers who want that 2009 Toyota Corolla or 2010 Honda Civic. They’re going to pay maybe $1,000 more than they would like to pay because the demand is there for highly efficient vehicles. It’s hot right now.”
Then what if gas prices slip by as much as 50 cents per gallon? That decline would drop it well below that $4 threshold many economists and industry analysts believe to be the tipping point to what kind of vehicle consumers might want.
“There’s still this knee-jerk reaction to gas prices being at $4 a gallon. We’re still in that compact vehicle frenzy,” Arca surmised.
“When dealers acquire vehicles either at auction or through trade-in, they’re trying to look 60 days or 90 days out,” he continued. “If a dealer was to take in a vehicle now, it being May, they’re trying to forecast what the market is going to be like all the way into August. That may be a tough thing to do with the economy and gas prices.
Nada Used Truck Prices - Bookshelf
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In comparing the national gross and net profit in new and used trucks with that in allied equipment and noting that less is involved in selling allied ...Auto body repair technology
If the cost of repairs is higher than the value of a vehicle, the insurance ... (Used with permission from the NADA Used Car Guide® Company) FIGURE 10-32 At ...N.A.D.A. magazine
A very large place, according to dealers canvassed by NADA Magazine. They said the time to service a truck, the time to replace worn parts, is BEFORE, ...N.A.D.A. official used car guide
Summary ol Motor Vehicle Laws. Fees & Regulations. NADA Recreation Vehicle Appraisal Guide $95.00 $75.00ea 22 Years ol Used Values from 1 973 -1994. ...United States code service
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