The Driving Sales Executive Summit is on in a BIG way Oct 9-10 at the Bellagio in Las Vegas. The industry is currently in a very dynamic yet super profitable state, but for how long? Change is just a supply chain kink or governmental policy away. Innovations are being introduced all the time, and now is the time to decide which ones are worthy and which ones are half-baked. Bottom line, it all comes down to people.

Is your dealership culture a positive, winning one, and are you and your team prepared for the next market phase that’s on the horizon? No one saw the Covid crisis coming let alone that it would usher in an era of unparalleled profit…we may not be so lucky next time…but we’ll be ready. This summit is focused to help you handle whatever is next.
Reg here and use Kelley100 to save $100:-): https://bit.ly/3RI7E0b

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The Lewis Black of Almonty Industries Interview

Kelly

So let’s talk about the fun stuff. And that would be mining in the United States. And there needs to be a political will. But I would assume that there also has to be environmental impact studies that need to be annulled. And that’s got to take some time as well. Do they have the testosterone across both sides of the aisle politically here, the United States actually started doing this here in the US? What’s your take on that?

Lewis

No, I don’t believe it’s going to really be feasible for either side, you know, to really get behind this, because ultimately, neither of their bases are pro mining.  Mines had that day, and they’re now seen as a very 19th century kind of, you know, throwback to history. They, you know, there is no appetite to now push domestic mining, you know, yes, there’s regulations. Yes, they’re the, you know, this is normal in every democracy, but they don’t want it in their backyard. I read this thing the other day, about wind farms of Cape Cod, that you have an enclave of people who are very environmentally active. And yet they don’t want to look at the wind farms. 

So it is apparently, according to the candidates who were there, that it’s difficult to land your plane with a wind farm, which, you know, I suppose, is one rationale. But ultimately, you know, I think that really sums it up. There are some communities still in the Appalachians and some communities that are pro mining, but it’s not on a national level. And it’s I don’t think that I think that what we’re looking at, there’s a bill going through now called the Irie shore act, where it classifies say tungsten as a rare earth. And they’re basically saying that if you’re in the defense contractor business in the US, you can’t use Chinese sourced rare earths and that includes manganese, lithium and tungsten, and then all the rare earths 17 of them, that I can’t even pronounce the atrium and the opium and, and so on. 

But it also talks about stockpiling commodities, strategic minerals and government offtakes, and I think that’s the direction they’re gonna go. They’re going to basically say, Look, you know, you’ve got to build it, where we can see transparency. But we’re not going to say you should build it here. We’re just going to say, here’s a government contract, if you meet these conditions of ESG, we’ll buy for you. And I think that’s probably the most creative approach they can take.

Justin

Yeah, so Louis, a little bit lighter of a question, how much earth do you have to move to get enough tungsten to make, let’s just say, one semiconductor and I know you’ve already mentioned they’re very, very small.

Lewis

Well, I mean, to be honest, not a huge amount. Because we use, you know, the Tungsten is used in a semiconductor is crushed down to a nano sized fraction, which is then injected into a gas because you can’t smelt a tungsten. And then the gas is pumped into each semiconductor, the coat on a microscopic level, a coating of tungsten, because one it’s very conductive. And secondly, it dissipates heat. So you don’t have to worry about, you know, a cobalt in anodes, they combust you know, a battery can go up and it burns, what 48 hours, you put tungsten on that same anode, it’ll get as hot as the sun and it won’t smelt,the temperature of the sun, it will smelt tungsten, but noncombustible. So it can take the heat. So you don’t need a huge I mean, the entire planet, we only produce about 90,000 tons a year of tungsten. That’s it. So it’s very dense, same density as gold. But we don’t mind. We don’t move a lot of Earth.

Justin

When a mine is kind of fished out, so to speak. Is there a reclamation process that you guys do around the globe? I know you have mines elsewhere, and I would assume that that process would be different in the United States due to our regulation. Can you elaborate?

Lewis

You’re working in a democracy, that’s all pretty much the same thing. Yeah, yeah, it’s, it’s, you know, you have certain, you know, different like in Canada, for instance, now you have first nations as well and have to be consulted. In Australia, you have indigenous Aboriginal people. So you have these additional layers, but ultimately, in terms of reclamation, environmental compliance, the international standards are just that now that they’re pretty much across the board. I think the main difference in the US is that even if you comply with all of the regulations, and all the laws that exist, you can still run into trouble if the political will is against you. So there’s the legal framework in the United States, there’s also the emotional framework and that can also impact you so that’s something to also consider in the US.

Justin

Yeah. So which has more impact on the land is it oil drilling, strip mining? What what has more impact on the environment?

Lewis

Strip mining. I mean, you know, drilling for oil is your drilling drill, it’s a hole and they kept the hole after you finished and that’s the end of it. When you strip mine, I mean, we hard mine, we strip mine, the strip mine, you have to when you finish, you have to fill in the hole. It’s a big hole. But in that time where the hole exists, it’s very visible. The mining in South Korea is underground. And we’ve developed systems where we put all of our waste and all of our tailings back on the ground. So that we know evidence that we’re there. And that’s the future. But strip mining has a lot more of an impact on the environment. Well, optically, environmentally.

Kelly

Yeah. So that’s a big nay nay. So um, I, for one, I’m in favor of the bill. I’d like to see it actually increased the amount of money that we put towards some of the most absurd things that just defies logic. Our dependence on China is ridiculous. It’s costing jobs. It’s blowing up prices left and right. And if we have the ability to eat more of the semiconductor pie, we may as well open our mouths. That’s the way I look at it, though.

Lewis

You  in the United States are the biggest consumer of semiconductors? I mean, it’s a classic example of how globalization has put everyone sort of, you know, in a precarious position, the US consumes more semiconductors than anybody else. And yet, you really don’t produce any semiconductors. But that doesn’t really make an awful lot of sense. But then you can say that about many, many industries. I mean, the car sector in the in the Europe right now, they have problems with wiring looms that you know, they have companies that make the wiring looms and then ship them to the cloud plants have installed, they have problems because over the years, they’ve been pushing that the subcontracting that out further and further east because they’ve been following the cheap labor and then are done by Ukraine. Of course, now Ukraine is rather busy to be making wiring looms for Volkswagens. So you know, you have, you know, car plants that are sitting idle because there’s no other, they don’t have anyone else right away that can now replicate that job. So I think this is probably a good wake up call to say, You know what, globalization is a wonderful idea, but you’ve got to remember, sometimes chasing, you know, the cheap route can cost you a lot more in the long run.

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Yes, sticker price size matters. Yes, financing matters. Yes, credit availability matters. But what gets a person interested in a particular vehicle, and moving through the funnel, is what excites their eyes.

It’s the same reason why millions of people spend so much time on Instagram, or why they spend so much time making sure they have just the right set of photos for their Tinder profile.

Selling cars in an Instagram society

Just consider for a moment that there are over 1 billion active Instagrammers, and more than half of those users (500 million) are active every day. What’s more, 95 million photos and videos are shared on Instagram every day, and over 40 billion photos and videos have been shared on the Instagram platform since its conception¹.

Diamonds are a girl’s best friend, but it’s a good photo that gets their attention, and to buy a car.

So, other than the obvious (higher sales), why should dealers care so much about better photos? Because without them they’re literally flushing money down the drain. Borrell Associates expects auto dealers will spend roughly $9.4 billion this year on advertising and marketing² — up 8.8% compared with 2021.

Online technology makes the photo process different

That’s a lot of money for a segment of the industry notoriously careful about advertising expenditure. However, the problem dealers run into isn’t the decision on whether to spend on advertising, but rather “how” they go about that spending. Especially when it comes to vehicle photos, online technology has become extremely advanced, and you can’t pull out a polaroid, snap a few quick pics and expect to grab someone’s attention anymore. In fact, without understanding all of today’s technical nuances of photography, your photos may not even make it to Google.

Across the hundreds of dealership advertising campaigns, we observe and consult on each month across the U.S., we typically see about half of dealership vehicle inventory photos disabled and rejected by search engines after initially posted due to poor image quality, overlays, dumb text, etc. Educating dealers on the finer intricacies of acceptable photography today, and how that translates over to their marketing technology needs remains mission number one.

Good vehicle photos aren’t just point-and-shoot

Dealers today have two primary areas of need when it comes to building the right vehicle image inventory – the right resources to take the photos, and the right training on understanding how to take good photos. Like many other areas of digital business today, there are plenty of apps and software available where dealers can upload their photos. But if they don’t have the right equipment and training, all of that software is like a shirtless guy on Tinder holding a fish – it’s useless, and it won’t get you paid. And training is important because dealership turnover remains a significant issue. Your best in-house vehicle photographer might be here today and gone tomorrow, so finding a partner with unlimited employee training is critical.

Once the photos are taken and uploaded, there’s one more key element that today’s apps and software won’t help with – professional editing. Vehicle images must offer the right angles, light balance, straightness and color corrections. These minor details can mean the difference between someone falling in love with their next BMW or moving on to see a Lexus.

The last thing to point out with photos today is quality control. Whether it’s used or new inventory, when it shows up on the lot the photos must be taken, and taken right. This is especially important today, where used and pre-owned inventory is just as critical as new. When vehicles come out of reconditioning, professional editors must catch every little detail, such as a photo of a vehicle with no bumper – it happens more than you think.

Understanding each of these photography best practice areas will be critical to not only meeting and surpassing monthly sales goals, but they will help ensure car shoppers remember the superior online shopping experience they had in your digital storefront. The right vehicle photography will keep them coming back, improve sales, and ensure that you’re not wasting digital marketing dollars each month on search engines. 

About The Author: Peter Duffy is the Founder/CEO of Dealer Image Pro, a professional photo, video & 360 software company based in California. Dealer Image Pro helps hundreds of dealers take their merchandising in-house by offering the equipment, unlimited training, and professional editing, and quality control for all of the dealers they work with. They are experts in-house merchandising and studio design for auto dealers. For more information visit https://www.dealerimagepro.com/.

Appendix:

1: https://www.wordstream.com/blog/ws/2017/04/20/instagram-statistics

2: https://www.mediapost.com/publications/article/370082/automotive-dealerships-poised-to-spend-94-billio.html

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Electrified vehicle sales growth of 81% led industry growth. Sales of EVs grew 44.8% year over year, setting a Q1 record with just under 100,000 sales. Sales of hybrid vehicles exceeded more than 200,000 in the quarter which makes sense as gas prices in California, for example, are now reaching $5 a gallon.

Cox Automotive and Kelley Blue Book analysis chart:

Cox and Kelley Blue Book Analysis:

Tesla sold approximately 69,300 vehicles in Q1 and accounted for 71% of total EV sales in Q1, down from 12% share in Q1 2020 as others jump in the game.

The new Tesla Model Y is the best-selling EV in the U.S., followed by the Tesla Model 3. The Model 3 was the No. 1 best-selling EV in 2020, but sales in the U.S. market declined by more than 50% year over year in the first quarter of 2021. The Chevrolet Bolt was No. 3 on the EV list, with nearly 10,000 sales in the quarter. The all-new Ford Mustang Mach-E, which went on sale in December, was No. 4, outselling both the Tesla Model S and Model X. 

While sales of EVs are increasing, hybrid sales are increasing more quickly, according to the Cox Automotive analysis. Sales of hybrid and plug-in hybrid vehicles jumped by 106% in Q1. Toyota, a hybrid pioneer, delivered most of that growth, selling 124,449 electrified vehicles in Q1, up from 49,576 in Q1 2020. Nearly 25% of new Toyota vehicles are now hybrids. The Toyota RAV4 Hybrid is now the best-selling hybrid in the U.S., with sales of 32,263 vehicles in the first quarter. The new Toyota Sienna minivan, which is available exclusively as a hybrid, is No. 2 with sales of 26,044.   

In all, there are more than 60 different hybrid or plug-in hybrid vehicles now available in the U.S. Honda is the No.2 hybrid maker, with more than 22,000 hybrids sold in Q1. Honda’s electrified tally was 7.1% of its total Q1 sales volume, up from 3.5% in Q1 2020. Ford is the No. 3 player with more than 18,000 hybrids sold, including 7,176 F-Series pickups. Volvo sold more than 2,800 electrified vehicles in the first quarter, accounting for 11.5% of the brand’s total sales in Q1.

“Electrified vehicle growth in the U.S. and around the world is shining a spotlight on battery development and sourcing,” said Cox Automotive Executive Analyst Michelle Krebs. “As the industry builds more vehicles with battery packs, sourcing of these parts and lifetime management of the battery cells is a critical hurdle the industry must clear.”

About Cox Automotive
Cox Automotive Inc. makes buying, selling, owning and using vehicles easier for everyone. The global company’s more than 27,000 team members and family of brands, including Autotrader^®, Clutch Technologies, Dealer.com^®, Dealertrack^®, Kelley Blue Book^®, Manheim^®, NextGear Capital^®, VinSolutions^®, vAuto^® and Xtime^®,are passionate about helping millions of car shoppers, 40,000 auto dealer clients across five continents and many others throughout the automotive industry thrive for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately-owned, Atlanta-based company with annual revenues of nearly $20 billion. www.coxautoinc.com

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• Trade-in Estimate: 71% 
• Virtual Test Drive: 64% 
• Contactless Delivery Options: 61% 
• Build Your Vehicle: 57% 
• Lease/Payment Calculator: 52% 
• Finance App: 46% 

Price & Payment Trends During Shopping 

• 48% of car shoppers say they still budget by total vehicle price; while 42% budget by monthly payment. 
• 46% of car shoppers say they included the value of their trade-in when budgeting for their next vehicle. 
• 31% of consumers said the dealer offered a slightly different payment onsite as advertised. 

Advertising Trends 

• 58% of consumers said the dealer had either a slightly different vehicle onsite as advertised, or a completely different vehicle. 
• Most people (76%) visited their local dealer after viewing an advertisement via an online video (YouTube); followed by streaming TV (72%); social media (71%); and search via Google (70%). 
• Only 32% of people reported visiting a local dealer after seeing or hearing an advertisement on traditional media (broadcast/cable TV, radio or newspaper). 

Vehicle Delivery/Online Purchase Trends 

• Nearly the same number of respondents said they had their vehicle delivered to them directly (29%) as those who said they picked up their car at the dealership (30%). 
• However, another 26% said they would have purchased their car or truck completely online had the dealership offered that option.

 “These survey results illustrate where car shoppers have been focused in leveraging the growing cadre of digital retailing tools being implemented by retailers today,” said Jeremy Anspach, PureCars Founder and CEO. “Since we now understand the effects the pandemic has had on the car-buying process, it’s good to start analyzing where consumers are most interested, and the changing role digital advertising is playing in driving people to the showroom.”  

About PureCars 

PureCars is an automotive MarTech company that’s in the business of transforming the way dealers, dealer groups, Tier 2 and Tier 3 providers make decisions that impact their bottom line — from advertising to operations. Everyone claims to have data, but only PureCars has PURE Intelligence, giving dealers a competitive edge. By providing superior information and execution, we give our customers precisely what they need to operate more efficiently, lower their cost per unit sold and win in their market. PureCars has been serving the automotive industry exclusively since 2007. We are a certified digital provider for 15 OEMs in the U.S. and 1 in Canada, compliant with 40+ brands and serve 65 of the top 100 dealer groups in North America. 

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The week-over-week increases continued for a sixteenth consecutive week. With the availability of used and new inventory remaining low, the values continue to push higher. New inventory is not expected to see improvement until the third quarter of this year, so values are expected to remain at elevated levels throughout the summer.

Car Segments

• Car segment gains ticked up slightly this past week (+1.30%) compared to the week prior (+1.25%).
• Seven of the nine car segments had gains exceeding +1.00%.
• Compact Cars are no longer experiencing weekly gains exceeding 2%, but the nine-week average increase is +2.04%.
• For the first time since mid-March, the Sub-Compact Car segment had increases below 1%.
• Near Luxury Car increased the rate of gains this past week (+1.22%), compared to the prior week (+1.04%).
• Sporty Cars continue to see large gains (+1.24%), compared to +0.36% during this same week in 2019.

Truck Segments

• Truck segment gains increased this past week (+1.12) compared to the previous week (+0.98%).
• All thirteen truck segments reported gains last week, with six exceeding +1.00%.
• Compact Crossovers led the gains at +1.86% this past week. In comparison, this same week in 2019, the segment showed a decline of -0.08%.
• Most of the Luxury segments have seen value increases decline in magnitude, but compared to 2019, all of these segments were experiencing declining values. For example, Full-Size Luxury declined by -0.59% during this same week in 2019.

Newer Used Vehicles (0-2-year-old)

Driven by an extreme shortage of rental returns and limited inventory of new vehicles, the price trends of newer used vehicles have been experiencing larger weekly gains compared to the older units. Within the last three weeks, newer used units reached levels that, in some cases, exceed new car pricing while the rate of growth has slowed for older units. For example, in addition to F150 Raptor, 2020-21 Chevrolet Corvette, and 2021 Jeep Gladiator and Wrangler, dealers are paying above MSRP for 2021 Kia Telluride and Hyundai Palisade, as well as other mainstream models.

The table below shows the average weekly price changes for 0-2-year-old vehicles.

Weekly Wholesale Index

2020 ended with used wholesale prices at elevated levels. With economic patterns (including the automotive market) driven by the pandemic, normal seasonal patterns (e.g. 2019 calendar year) in the wholesale market were not observed for most of the year. We saw a similar picture in 2009, at the end of the Great Recession. It is now clear that 2021 will also not have typical seasonality patterns as the market is going through a rapid increase in wholesale values. The spring market arrived about 7 weeks earlier and with much stronger price increases compared to a typical pre-COVID year. The graph below looks at trends in wholesale prices of 2-6-year old vehicles, indexed to the first week of the year. Currently, wholesale prices are more than 27% higher compared to the beginning of the year (adjusted for the mix).

Retail (Used and New) Insights

• General Motors announced price increases on their 2021 GMC line-up with most of the increases ranging from $50 to $800 to be applied to the base MSRP.
• Electrification is in the plans for the majority of OEMs now with major announcements coming out every few weeks about new models to come:
  • On May 19^th, Ford will unveil their electric Full-Size Pickup, to be called F-150 Lightning.
  • Porsche announced their plans to release an all-electric Macan variant in 2023, after a refreshed gasoline powered Macan will be released in 2022.
• The global microchip shortage continues to wreak havoc on production levels. Nissan announced they are expecting to see a reduction of 500,000 units in 2021.

Used Retail Prices

With the proliferation of ‘no-haggle pricing’ for used-vehicle retailing, asking prices accurately measure trends in the retail space. Retail demand slowed down at the end of last year, and thus resulted in declining retail asking prices over the last several weeks of 2020. As demand rebounded in January, retail prices seemed to lag wholesale prices – retail asking prices continued to decline throughout January and remained stable in February. March had an accelerated growth in retail prices, but the rate of growth is still lower compared to the increases of wholesale prices. In April, retail prices picked up speed as demand accelerated, fueled by stimulus payments, tax season, and shortages of new inventory. Currently, the prices are more than 15% above where we started the year.

This analysis is based on approximately two million vehicles listed for sale on US dealer lots. The graph below looks at 2-6-year-old vehicles.

Volume

Used Retail

Current used retail listing volume is about 14% below the start of the year, but the inventory levels stabilized in the last 4 weeks.

Days-to-turn have been decreasing since the middle of March, as retail demand picked up across the country due to tax returns and the additional round of $1,400 stimulus checks deposited into consumers’ bank accounts.

Wholesale

• Floor pricing continues to increase each week, but availability of average and clean units remains scarce which is leading to declining conversion rates in recent weeks.

• Despite the limited inventory on dealer lots, many dealers are finding themselves receiving greater profit margins in the wholesale channel as opposed to their own retail lots.
• Armed with the knowledge that their available inventory in the pipeline is extremely limited, remarketers are finding that they are able to continue to raise their floors and hold firm on their set values. They plan to accept a no-sale this week with the expectation it will sell the next.

The post Automotive Inventories Down, Values Up (Black Book) appeared first on DealershipNews.com.

Motorcycle & Powersports Market Update

“After the strong start to 2021 we observed last month, for March, most Powersports segments have seen relatively minor changes in value. Since this is normally the month when most vehicle types wholesale prices begin to show significant strength from their winter lows, the currently elevated prices fueled by COVID-19 are likely to upset long standing patterns and trends.”

– Scott Yarbrough, Senior Analyst, Motorcycle & Powersports

Feb to Mar Average Segment Change in Value

• Snowmobiles are our biggest gainers for the third month in a row, up 6.0% as we enter March. Despite their later start, the sleds have now followed the rest of the powersports market since the pandemic began to much larger than normal seasonal gains in value.
• Inventory still remains tight on both the new and used side of the industry, helping to keep all prices elevated well beyond normal levels. Many one- and two-year-old used bikes are currently retailing for near, or even above, original MSRP.
• A little over 2 full months into 2021 it is becoming apparent that the changes to the Powersports market brought by the COVID-19 pandemic will continue to affect seasonal valuation trends for the foreseeable future. This month’s modest changes stand in stark contrast to past years’ March prices, which saw much larger spikes in value.
• Personal Watercraft and Jet Boats are our second and third largest gainers this month, signifying that the water-based segments will likely be strong performers once again as we head towards summer.

Segment Spotlights & Industry News

Cruiser Performance

Looking at the graph below of the performance of the Cruiser segment versus its performance from a year ago shows a significant change in how the market has performed over the winter months. Instead of declining as occurred during the winter of 2019/20, prices rose steadily, but now appear to be headed for smaller increases heading towards spring.

Off-Road (Dirt Bike) Performance

Much like the Cruiser segment, the Dirt Bikes never saw any significant depreciation during the winter months, leaving their prices elevated as we enter the Spring selling season. This has led to smaller increases than we would normally see for the time of year. It is still important to remember that with overall values above historical norms, normal spring appreciation trends may be lower than usual.

• The National Marine Manufacturers Association (NMMA) reports in Boating Industry Magazine that current inventory levels are running 20% to 60% below normal for the recreational boating industry, which includes both the Jet Boat and Personal Watercraft segments, as well as traditional boats. The NMMA’s December Monthly Shipment Report showed a 17% increase in shipments versus November as the industry recovers from COVID-19 related issues, and manufacturers work to replenish dealer inventory after 2020’s record sales.
• With the recent passage of the $1.9 trillion American Rescue Plan by Congress, $1,400 stimulus checks have started going out to tens of millions of people. This flood of money, coupled with the annual tax return season, is likely to induce another spring selling surge similar to last year. While vaccines are beginning to make a dent in the coronavirus pandemic, the desire for “socially distant” recreation is likely to remain a while longer, and coupled with tight inventory levels, we anticipate current elevate pricing levels to continue.

Recreational Vehicles Market Update

“Although the values of used RVs sold at wholesale auctions had dipped in December, they rebounded in January and actually reached all-time highs. With the exception of a few blips, the values of both motorhomes and towables have increased steadily since late Spring when RVing really caught on as a way to get out of the house and do something fun while still being safe and socially distant.” – Eric Lawrence, Principal Analyst, Specialty Markets

Wholesale RV Values Reach All Time Highs

For Motor Homes (including Class A, B, and C)

• Average selling price was $60,739, up $5,667 (10.2%) from the previous month.
• One year ago, the average selling price was $51,490.
• Auction volume was up 7.9% from the previous month.
• The average model year was 2011

For Towables (including Travel Trailers and Fifth Wheels)

• Average selling price was $19,570, up $1,379 (7.6%) from the previous month.
• One year ago, the average selling price was $14,812.
• Auction volume was up 9.1% from the previous month.
• The average model year was 2014.

Industry Highlights

According to the RVIA, the total number of RVs shipped in January reached 45,930, a record for the month, and an increase of 39.2% over January 2020. Towables totaled 41,414 units and motorhomes accounted for 4,516. The latest projections forecast that total 2021 production will come in at 533,356, which would be a new annual record, topping the 504,600 units shipped in 2017.

• Thor Industries announced their fiscal 2Q 2021 sales reached $2.73 billion, up 36% year over year.
• The RVIA reported that 11.2 million households currently own an RV, an increase of 26.1% over ten years ago.
• Camping World announced they are in the process of opening new RV dealerships in Georgetown, Delaware; Lincoln Nebraska; and Billings, Montana. They have also acquired several existing dealerships during the past several months.
• Statistical Surveys reported that 29,958 RVs were registered in January, an increase of 26.1% year over year.
• RV technicians are in high demand – it is the third fastest growing job in the United States.
• RV Megadealer Camping World reported fourth quarter 2020 revenue of $1.1 billion, up 17.5% over the same period in 2019. Net income rose to
• $40.3 million after posting a net loss of $80.9 million in 2019 due to restructuring.
• The RVDA and Baird announced the results of a survey showing that RV dealer sentiment trended positive in February, with a score of 70. Their three-to-five year outlook was also 70. (Score is out of 100, anything over 50 is considered positive.)

Collectible Cars Market Update

“The first few months of the year are typically a very important time in the collectible car world, as the results achieved at the auctions set the overall tone for the upcoming year. This year COVID threw a wrench into the usual order of things, but many of the events that were cancelled earlier in the year are starting to take place and things appear to be getting somewhat back to normal.”

– Eric Lawrence, Principal Analyst, Specialty Markets

Auction Activity

• GAA Classic Car Auction’s most recent sale was held the last weekend in February at their usual Greensboro location, “the Palace”. They announced that they set several internal records, including: highest sell through percentage (94%), total sales amount (over $19 million), and number of registered bidders (over 1,000).
• RM Sotheby’s held their live streamed Paris auction February 13th, offering 40 high-end sports cars and a collection of memorabilia. Total sales came in at just over $11.1 million, with a preliminary sell through rate of roughly 70%. Some of the featured lots included one of Rod Stewart’s personal Lamborghinis and several vehicles from “The Gold Collection”.
• Gooding & Company held the second part of their Geared Online: Phil Hill Automobilia Collection in early February. The auction featured 306 items, including some of Mr. Hill’s racing helmets, Rolex watches, racing suits, clothing, awards and trophies, and even an original signed script from the 1966 movie Grand Prix. All items were declared sold, producing a sell through rate of 100%, and totaling over $1.15 million.
• Bonhams’ Legends of the Road auction was a very small auction by typical standards, with only six cars and a handful of vintage parts being offered, but they were all sold and generated just under $9 million in sales, not including the Ferrari 275 GTS convertible that was sold to a private party just prior to the public auction
• RM Sotheby’s Online Only: Open Roads February auction was billed as their first transcontinental sale and was really three separate auctions presented as a group. The first one to close was based in Europe and the UK, which saw total sales reach roughly $4 million, day two was for cars based in North America and totaled $3.2 million, and day three wrapped up with a Swiss single-owner collection of seven rare Porsches, which accounted for just under $4 million. All told, the auctions had a grand total of just over $11 million with a 76% sales conversion rate.

Notable Recent Auction Sales Include:

• 1971 Lamborghini Miura P400 SV $2,900,000 (RM Sotheby’s)
• 2005 Porsche Carrera GT $835,000 (RM Sotheby’s)
• 1954 Kaiser Darrin Roadster $137,500 (RM Sotheby’s)
• 2016 Porsche 911 R Coupe $441,375 (RM Sotheby’s)
• 1956 Mercedes-Benz 190 SL Roadster $110,000 (RM Sotheby’s)
• 1988 BMW M6 Coupe $55,000 (RM Sotheby’s)
• 2017 Ford Shelby GT350 R Coupe $73,700 (RM Sotheby’s)
• 1937 Bugatti Type 57 Roadster $5,665,000 (Bonhams)
• 2017 Ford GT Coupe $970,000 (GAA)
• 1959 Dodge Custom Royal Convertible $175,000 (GAA)

Market Trends

The Vintage Pickup Truck segment was originally limited to pickups, but has recently expanded to include collectible SUVs, many of which were constructed on modified truck chasses. A few examples are Ford, Chevy/GMC, and Dodge pickups built from the mid-1940s up through the early 1970s, early Jeep CJs, Toyota FJ40s, International Scouts, early Range Rovers, and first-generation Chevy Blazers and Ford Broncos. Pickups have been on a run for the better part of a decade, and SUVs have been on fire for the past two or three years, with values doubling or sometimes tripling during that time frame.

The changes by vehicle segment were mixed this month. While Pony Cars, Vintage Exotics, and Classic Trucks and SUVs increased, Muscle Cars, American Classics, and Vintage European Sports cars dropped a little. As the demographics within the collectible car community continue to evolve over time, we are seeing tastes shift as older owners continue to age out of the hobby and be replaced with younger ones.

Medium and Heavy-Duty Market Update

We continue to see strength in all truck segments as we prepare to enter the second quarter of 2021. Continued supply chain issues are still having a huge impact on new equipment production. Conversations with OEMs and industry professionals lead us to believe that these issues will continue throughout much of 2021. Production will likely not catch up with demand until this time next year. Auction volume continues to decrease. Many fleets are choosing to keep units they might would normally remarket, as uncertainty in new production remains. In addition, dealers are keeping many of the trade-ins they receive because they need retail inventory. The majority of the units we see showing up at auction are rough, higher mileage units. Recent auction and retail transactions show increasing prices on late model and older units as overall new and used supply continues to decrease. Reports from Taylor and Martin, Ritchie Brothers. Manheim, and Adesa show continued week over week strength in used pricing. JM Wood is holding an auction this week (March 16th-20th) in Montgomery, AL. As usual, they will run a number of dump and straight trucks and will provide us with some great insight into where prices and demand are trending on construction units.

Heavy-Duty Trucks

• Over-the-Road and Regional Tractors continue to increase in demand and price due to limited availability.
• Heavy-Duty Construction units remain strong; however, we have not seen as much of an increase as we are seeing on other segments. This is likely due to how strong this segment has been in the past.
• Below you can see how stable Construction Trucks have been compared to OTR and Regional Tractors.

Medium-Duty Trucks

• We continue to see price increases in all Medium Duty truck classes thanks to production slowdowns.
• With no immediate fix in place, we expect to see stable pricing for the majority of 2021.
• Last mile delivery services continue to thrive. This is helping increase the demand for most Medium-Duty units.

Retail Sales

According to data gathered from Federal Reserve Economic Data (FRED) retail sales figures were relatively flat from January to February due to production limitations. OEMs simply cannot produce trucks fast enough to keep up with demand. Fleets are in need of new trucks in order to replace aging equipment and also to keep up with improving freight demand. Discussions at recent industry events such as ACT’s 64th Outlook Seminar and NTEA’s Work Truck Show help support a positive outlook for transportation, construction, and freight. This increase in demand mixed with increasing production issues will lead to further stabilization and increase pricing in Medium and Heavy-Duty trucks for much of 2021 as OEMs and suppliers scramble to produce as many trucks as possible.

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The post Specialty Market Insights – 3/18/2021 appeared first on DealershipNews.com.

Wholesale Prices, Week Ending March 13^th

This past week saw another round of all segments reporting increases in wholesale values. New and used inventory shortages coinciding with the traditional spring/tax season bump, as well as an additional round of stimulus, has led to larger than normal weekly gains in values. With used supply remaining tight, remarketers are raising floors and holding firm.

Car Segments

• The Car segments had a second week in a row of value gains exceeding 1% (+1.12% last week vs +1.11% the prior week).
• Mainstream segments all reported gains exceeding +1% this past week, with Full-Size Car (+1.57%) being the largest.
• The Near Luxury Car segment was slow to experience increases in prices, but the rate of increases has been gaining each week with this past week’s rate growing to +1.18%.
• Sporty Cars broke the 1% level again this past week, but the rate of increase (+1.02%) did slow down compared to the +1.78% and +1.89% gains the previous two weeks.

Truck Segments

• The Truck segments had larger gains this past week at +0.99%, compared to +0.58% the preceding week.
• Eight out of the thirteen truck segments reported gains exceeding 1%, with three of those eight being greater than +1.50%.
• The Sub-Compact Crossover segment had the largest level of truck segment increases for a third week in a row at +1.59%.
• Full-Size Trucks doubled the rate of increase from +0.50% two weeks ago to +1.00% last week. The Small Pickup Truck segment also had a significant increase to +1.52%, compared to +1.06% the prior week.

Newer Used Vehicles (0-2-year-old)

Driven by an extreme shortage of rental returns and limited inventory of new vehicles, the price trends of newer used vehicles have started to diverge from older units. The table below shows the average weekly price changes for 0-2-year-old vehicles.

Weekly Wholesale Index

2020 ended with used wholesale prices at elevated levels. With economic patterns (including the automotive market) driven by the pandemic, normal seasonal patterns (e.g. 2019 calendar year) in the wholesale market were not observed for most of the year. We saw a similar picture in 2009, at the end of the Great Recession. It appears that 2021 will not have typical seasonality patterns. So far, the spring market arrived about 7 weeks earlier and with much stronger price increases compared to a typical pre-COVID year. Graph below looks at trends in wholesale prices of 2-6-year old vehicles, indexed to the first week of the year.

Retail (Used and New) Insights

• Jeep unveiled the all-new Wagoneer and Grand Wagoneer last week with loads of luxury features that on some trim levels will push the MSRP over $100,000 and will add competition to the Cadillac Escalade and Lincoln Navigator.
• General Motors announced the next GMC electric vehicle, a Hummer SUV, will be unveiled on April 3^rd. Production is expected to begin in early 2023.
• Kia announced their new nomenclature for their upcoming electrified line-up will be “EV” followed by a number, with the first vehicle being the EV6 crossover.
• GM is idling another plant this week through at least the end of the month as a result of the chip shortage. The Lansing, MI plant is where the Chevrolet Camaro and Cadillac CT4 and CT5 are produced.

Used Retail Prices

With the proliferation of ‘no-haggle pricing’ for used-vehicle retailing, asking prices accurately measure trends in the retail space. Retail demand slowed down leading up to the December holidays, and thus resulted in declining retail asking prices over the last several weeks of 2020. As demand rebounded in January, retail prices seemed to lag wholesale prices – retail asking prices continued to decline throughout January and remained stable in February. This analysis is based on approximately two million vehicles listed for sale on US dealer lots.  The graph below looks at 2-6-year-old used vehicles (similar to our wholesale price index).

The post Market Insights – 3/16/2021 appeared first on DealershipNews.com.