Hello and welcome to this week’s Beggs on the Used Car Market Report from Ricky Beggs of Black Book. Although this is the second Monday of 2014, this is the first current market focused report for 2014. For those of you who tuned in last week you were able to hear insight about the market from Jack Neshe and Ellie Johnson, this year’s leadership team of the National Auto Auction Association. If you missed it, all of these weekly video blogs are archived and available to view so just reach back a week to hear from Jack and Ellie. We hope you will join us each Monday for the latest Black Book insight into what we are seeing within the market activity and data.

So what have we seen now that a full week of uninterrupted auction activity has taken place? Actually there has been some interruption in the form of the coldest weather most of us have ever witnessed. I even heard one news report that said 49 of the 50 states had freezing or below temperatures. For those of you in Hawaii, you just don’t know what you missed.

Let’s take a look at the results and reasons behind the current market. The first of the year seasonal climb in gas prices took a little break from increasing week over week and stayed at $3.33 a gallon. This is a $.09 increase since the increases started, yet we are only $.03 above year ago levels.

Because of a more consistent auction schedule the overall activity the necessary number of adjustments is the greatest since the last full week before the Christmas and New Year’s holiday weeks. At 1733 adjustments on average each day during the week, this is just greater than the 1691 per day for the matching year ago period.

Over the past week I have talked with numerous people within the industry and media personnel regarding our thoughts on the market for 2014 and what will be the factors driving the market as well as the new car sales levels expected for 2014. New car sales levels were stronger than most predictions for 2013, finishing at 15.5 to 15.6 million, depending on which reports you see. For 2014 Black Book feels new car sales will come in at an increase year over year to just over 16.0 million and to be more precise, 16,056,123. This is less of a year over year increase than we just had.

When you look at annual used car depreciation levels for all of 2013 the level of strength was a very strong market at -12.8%, a slight increase from the -12.4% for 2012. With the expected increase in new car sales in 2014 we feel the depreciation level will be greater in 2014, maybe at a -13.5% level. This is still much better retention than the traditional pre-recession levels of about -15.0%. 

When we look at the average segment change levels of both the cars and the trucks, at -$78 and -$55 respectively, both are at greater levels of decline than one year ago periods. If you look at individual segment change levels year over year, only three segments, two from the cars, the Entry Level Cars and the Prestige Level Cars, and one truck segment, the Passenger Minivans, had a greater declining level one year ago. Every week will not be this clear of weaker year over year comparisons, but we will be providing a look at these comparisons throughout the year.