Welcome to this week’s edition of Beggs on the Used Car Market, with insight and analysis from Ricky Beggs, Editorial Director of Black Book.

During the past week new car sales reports were released and this portion of the industry continues to prosper. Within the new car market there has been for the past year or so, and is currently, a steady stream of new models, major redesigns and solid refreshes. The pipeline of even more exciting models is backed up and just waiting to arrive at showrooms representing almost every manufacturer. Part of the Black Book Editors’ efforts is focused on the extensive processes involved in projecting residual values for the industry for leasing and risk analysis. Getting direct product insight from the manufacturers enables us to make solid projections. This past week the weather in Michigan could not have been any better, but unfortunately we did not get to do any evaluations on the Michigan International Speedway track.

At some point each of the new models will hit the used market and at that point we will be knowledgeable of these models and their various trim levels and content that affects value.

Let’s take a look at what transpired in the wholesale channels this past week. Gas prices continue to be in favor of the consumer with their recent steady decline. This past week they fell another 2.4 cents to a national average of $3.52 per gallon which is $.11 below year ago prices. More of a recognizable change is the $.19 drop since the first of July. This is not a big enough change or at a price point to drive the market values in either direction for any specific models or segments. I was even asked this past week what was a price point that would be a moving factor for market values and sales pattern changes. Unfortunately this was asked in a tone of thinking higher gas prices rather than lower price points. We feel it is not just a certain price point of gas at the pump, but just as much as to how quick it moves, what if any specific factor is considered a cause, and does it stay at the new price point for an extended period of time or head down almost as quick as it went up. For right now there is no need to sweat any increases at the pump.

Taking a look at the car segments, the -$72 or -.43% change this past week was the lowest level of decline in the past three weeks. But compared to the year ago change of -$43, it is still a pretty actively moving market. The change in values was pretty consistent across the board as seven of the ten car segments had lower declining levels compared to the prior week. On the softer segments, the Full-size Cars at -$111 and the Entry Mid-size Cars at -$98, represent some pretty substantial adjustments, and we will be watching these segments even closer this coming week. The most stable segment within the cars in a change level, was the Compact Cars at -$28.

The truck segment overall change was only slightly greater than the previous week coming in at -$49 or -.31% versus -$45 the prior week. A segment that continues to adjust in larger than normal levels is the Full-size Crossovers at -$161 this past week and a two week average of -$130 and a five week average of -$113. We may have a seasonal type change as one year ago the segment had a -$98 change. The Compact Pickups are steady in their change level, but at significantly lower levels of decline at -$3 this past week and a five week average change of -$15. The Compact SUVs are not much softer than the Compact Pickups, coming in at -$16 this past week and a five week average of only -$24. Overall consistency is the pattern in the trucks as the average segment change this past week of -$49 matches the five week average -$49.

Even though the percentage of increasing adjustments is relatively low at only 18%, the average increasing adjustment was the highest in the past five weeks at +$168. On the other side with the decreasing adjustments at 82% of all adjustments, the average change of -$160 was the lowest amount of decline over the past eight weeks.