Welcome to this week’s edition of Beggs on the Used Car Market, with analysis from Ricky Beggs and Black Book. As the calendar is closing out the month of July the market is indicating a variety of actions. The smaller and more fuel efficient models are getting some attention again after softening for just over a month once the tax season expired. Even some of the six to eight year old models are again needed for the retail market. If you are looking for some twelve to eighteen month old off rental units you are looking at a segment of the market that might just be the most unstable in value right now. To understand this market movement, just remember to look at the calendar and you see August and September bringing us another model year into the market. Overall the market is softening, because as one Black Book survey person commented in his report “the buying dealers are not complaining, so the market must be softening.”

As the market values are falling, and contrary to the smaller more fuel efficient models being the more stable segments in the market, as I mentioned earlier, gas prices continue to decline. This past week gas fell by another $.04 to $3.59, which is $.09 below the $3.68 price per gallon of one year ago.

Overall the cars average segment change this past week was -$81, almost twice the level of change of -$42 one year ago. Only once in the past year has the average segment change been at a greater declining level, and that was the -$84 for the week ending September 20, 2013.

The car segment with the lowest weekly declining level was the Near Luxury Cars at -$31 or a -.20% change. This is a segment that has been declining greater than the overall car segment change for the previous five weeks. Interesting enough is that this same segment of Near Luxury Cars, which includes vehicles such as the Audi A4, the Cadillac CTS, Lexus ES350 and even the Lincoln MKZ, one year ago, was also the lowest declining segment within the cars.

As has been the case for every week since the week ending February 28, 2014, the level of change for the trucks has been less than the cars. But similar to the cars the trucks are softening even more as the summer weeks pass coming in at -$59 this past week, the largest weekly decline for the trucks since the week ending February 21st.

After a rather large decline for the Compact Pickups of -$50 two weeks ago, this segment bounced back with only a $2 declining change this past week, and similar to the -$4 change of one year ago.

On the softer side of the trucks, the large truck based utilities, the Full-size SUVs and the Luxury SUVs had the largest declining levels of any segment for the past three months. Respective changes of -$149 and -$148 for these SUVs this past week are similar to the levels of change we have seen this past week, and several times with the Prestige Luxury Cars and the Premium Sporty Cars. 

The first half of the year overall brought us a very strong market in relation to the level of depreciation of only about -4%. As the economy and the new car sales continue to improve our forecast of annual depreciation for 2014 we feel will be greater than the solid -12.8% of 2013. We have projected an annual depreciation of -13.5% for 2014 so the current levels of change in the past few weeks are indicating a market that looks to make up for the really strong first half of the year and actually reach that previously projected -13.5% level for the entire calendar year. So keep an eye on the expected changing market values as we head toward 2015 on the calendar. 

The Black Book Editors and survey personnel will be back online and on the lanes again this week getting the pulse of the market. When you see them on the lanes let us know how you see the market.