Hello and welcome to this week’s edition of Beggs on the Used Car Market. I’m Ricky Beggs, Editorial Director at Black Book. There have been so many events happening within the auto industry this past week that have a direct influence on the used car market. A few weeks ago a tremendous group of storms consisting of tornados and tremendously large hail passed right by the Denver airport. Fortunately the track of the storm just missed the terminals at the airport and headed directly opposite of the heavily populated areas of Denver and near the auctions in Aurora. Well, this past week a significant number of the damaged cars from that day of storms made it to the local auctions. Even though the market activity was pretty solid, some of the values reflected the existing dings that covered many of the cars and trucks. A computer summary sheet of the sales would not have identified the softness as a result of the hail damage, but because the Black Book survey person was standing on the auction lanes classifying the available units, our analysts were able to react accordingly to the conditions of many of the sold units.

The used market also is dealing with several off the lane industry activities. The availability of used cars continues to increase within the market, offering the buyers a chance to be a little more selective. Notice I did not say an overabundance of really nice front line ready, low mileage units in the four to five year old range.

Gas price volatility is again the topic within the media and around the water cooler. Although the national average price of gas at the pump only increased by just over a penny this past week, by the next reporting period we will probably see a greater increase. The real concern relates to factors in the middle-east we can’t control, so speculation will continue to exist. Diesel fortunately did decline by another penny over the past week, continuing the decline that has existed for the past seven weeks.

Black Book Sr Car Editor, Terry Park, was able to spend some time getting a hands on feel for the newest Subaru models coming into the market, enabling him and his team of analysts and editors to have the complete insight when projecting residual values for the finance industry.

And speaking of new cars and trucks, even with all of the recalls from almost every manufacturer, new car sales continue to prosper, which ultimately brings more trades, and more of these into the wholesale channels for distribution into the market. Add in the traditional and expected seasonal summer softening and the comments such as “downtime in the business” and the feeling that the buyers are in a “wait and see attitude” goes right along with several reports that referenced that prices seem to be leveling off and adjusting down.

Looking at some of the resulting actual changes, the number of adjustments made during the past week was the lowest number during the three weeks of June, at only 1318 per day on average. And of those adjustments, the 28% that were positive changes is the fewest since the week ending February 21, 2014. With all these changes there were improvements as six of the ten car segments had smaller declining amounts week over week, leading to the smallest overall average segment change within the cars during June at -$45, which was slightly more than the -$39 in the year ago matching week.

The truck market continues to trend with lower levels of depreciation than the cars, but for each of the weeks of June the average truck segment change amount has increased, from -$9 to -$17 and now, to -$34 this past week. We are still better than one year ago when the change level was -$48. Ten of the fourteen truck segments had larger declines week over week. Seven of the segments had their largest decreasing level for a week during the past three months. For the first time in at least the last three months, the Full-size Pickups did not increase for the week coming in this week with a $0 change.

We hope you will check back with us again next week to see what factors, direct and indirect, will contribute to the market conditions and adjustments. We will see you on the lanes and have a great week!