Buyers' Lane Watch: Seeking 'Good Deals' Amid Plummeting Prices

Auto Market Experiences Significant Drop in Car Values

by Nouman Rasool
Buyers' Lane Watch: Seeking 'Good Deals' Amid Plummeting Prices

The anticipated "summertime slowdown" in the automotive market has intensified at a rapid pace, with last week witnessing the largest single-week drop in wholesale vehicle values since mid-January, according to the latest Market Insights report by Black Book.

Despite an improvement in the estimated average weekly sales rate, which inched up slightly to 47%, wholesale prices experienced a significant decline of 0.73%. Black Book's report, released on Tuesday, highlighted that sellers have begun adjusting their pricing floors, resulting in the downward trend in wholesale prices.

Prior to the July 4th holiday, the market had been steadily declining, although sales rates remained low due to cautious buyers and firm pricing by sellers. However, in the first full week after the holiday, sellers showed a willingness to negotiate.

Despite this shift, buyers were still not eager to take advantage of the lower prices, as they focused only on securing what they deemed to be "good deals." This preference for favorable purchasing opportunities is reflected in the growing inventory levels on dealers' lots and an increase in the days to turn for vehicles.

Car Values Plummet: Age and Segment Analysis

Examining the volume-weighted basis, Black Book found that values for car segments as a whole dropped by 0.77% last week, representing an increase from the 0.52% decline observed the previous week.

The report also highlighted the depreciation in car values based on age, with prices for 0- to 2-year-old car segments decreasing by 0.53%, while values for 8- to 16-year-old cars experienced a decline of 0.63%. Notably, all nine car segments recorded price decreases, with luxury cars leading the decline by softening 1.10%.

This marked the largest single-week drop for luxury cars since the final week of 2022. On the other hand, sporty cars showed the smallest decline, slipping by 0.40%, although it was still the segment's largest depreciation since the week of New Year's.

Shifting focus to trucks, Black Book's volume-weighted data revealed a 0.70% decrease in overall truck segment values last week, compared to the 0.45% decline in the previous week. Analyzing truck values by age, the report indicated a 0.49% drop in prices for 0- to 2-year-old trucks, while values for 8- to 16-year-old models declined by 0.52%.

Similar to cars, all 13 truck segments experienced price decreases, with mid-size and compact luxury crossovers leading the way by sliding 1.12% and 1.34%, respectively. Additionally, small pickups registered another significant drop of 0.99% last week, doubling the depreciation level observed in the previous week.

Black Book concluded its report by reiterating the ongoing trend of declining prices across all segments in the wholesale market. Sellers have begun adjusting their pricing floors, resulting in increased buyer interest. However, caution persists among buyers as they continue to seek out "good deals." The report emphasized that the Black Book team of analysts will closely monitor the market for further trends and insights as the summer progresses.