Buying cars at auction has certainly changed in the last few months. Perhaps watching the auction lanes have filled a void left by the lack of sports on television in the wake of Covid-19. There’s been a slight uptick in activity as used car managers are shifting from lookers, to actual bidders buying cars at auction.
According to Black Book’s volume weighted data, the market is still soft and has declined week over week at an average rate of depreciation of 1.31%.
Black Book analyst in their latest report,show cheaper lower condition report vehicles are still strong, but the hardest hit segment is the 0-2 year old cars due to the pressure from New car incentives.
Here are a few insights from different auctions around the country and what there reporting.
— From Florida: “We are still seeing the junk hold up well. We had the largest online bidder presence we’ve had since the crisis has been going on.”
— From North Carolina: “EVs and hybrids are depreciating more right now with the low fuel prices.”
— Another comment from Florida: “There were many cases today where the dealers would step-up to the counter bid.”
— From Pennsylvania: “Bidding was active and constant today with a lot of sales.”
— From Illinois “Buyers didn’t hold back today, even when CRs were going below 3.0.”
COVID-19 led to the largest single-month drop of our Black Book Retention Index since its creation in 2005. The April Index is the first full-month view of the impact that the pandemic is having on the wholesale market. This past month, it dropped -6.1% to 106.7, the lowest reading since May of 2010.
What Does this Mean for Buying Cars at Auction?
The wholesale market may have dipped and seen a minor recovery, but these adjustments are now happening more frequently. By more frequently, I mean daily not weekly or even monthly. If your a student of the wholesale market like I am, it’s imperative to set up searches so you can monitor the spread from adjusted MMR to retail book on any given day. The market is moving so quickly what may have looked like a great deal last week, could spell disaster on the same car this week. You could find yourself 5K hung in a GMC Denali.
The captive finance companies like GMF, MB Financial and Kia Motors are sitting on massive amounts of inventory. When some analyst gets jumpy and tells the CFO’s to pull the trigger, there will be huge opportunity for to buy cars at auctions at hugely discounted values.
Check out this F-150 in Kansas City. (Remember this may work better in your particular market than mine, based on days supply and scarcity index)
Here’s a gift for one of you that may be in acquisition mode.
It checks a lot of boxes for a projected $3100 profit with a 66 market days supply and 3K behind MMR wholesale value. So it’s worth taking a look at.
I will say after looking at the pics, I’m not agreeing with the 4.9 CR though.
If your not researching this data on a daily basis you will miss the sudden dips and adjustments in the wholesale market. Like my good friend Scott B. Sadler says,
I hate to act like a vulture preying on the weak, but I’m damn sure not going to miss opportunities like these to improve my bottom line. If I don’t, someone else will.
I would love to hear about some of the movements and patterns that you have seen. Leave a comment below so we can all learn and discuss what other buying opportunities, or pitfalls, may be out there.