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Black Book: Strong Auction Sales in June

By Jeffrey Bellant June 24, 2020
Classic car values remain stable at auction Classic car values remain stable at auction

Black Book, in its June 23 COVID-19 Market Update, said recent activity has been strong, though it projects wholesale prices to drop compared to a pre-COVID-19 baseline this summer/fall, as the United States economy suffers through the effects of COVID-19.

“Auction activity this past week was on fire, with high conversion rates and high sale prices,” stated Black Book’s report. “Most no-sales this past week were the result of sellers holding firm to floors and not due to a lack of demand by the buyers. As a result, buyers are having to pay top dollar to secure quality inventory.

“As we entered June, wholesale prices continued to increase, and we now project that we will see an overall market appreciation for the entire month of June. As a comparison, last year’s prices declined by 0.9 percent over the same period.”

 However, Black Book projects demand will change later this year.

 “We anticipate that later this summer and fall, the wholesale prices will be between 10 percent and 15 percent lower than originally projected before the pandemic, due to a glut in supply and much weaker demand,” Black Book reported. “Prices will start to recover in 2021 as the economy becomes stronger. We also anticipate that older, cheaper vehicles in average condition will not decline as much due to increased demand for these units.”

The company continues to project that values will return to the pre-COVID-19 baseline as used supply will decline as a result of cuts in retail and fleet sales throughout the remainder of 2020 and into 2021.

A strong retail month in June has led to tight supply for dealers.

“The lack of repossessions, delayed lease returns, and staffing limitations at the auctions are all contributing to low inventory levels at the auctions.,” stated Black Book. “The estimation is that it will be at least two more weeks before we start to see an increase at many auctions around the country.

Black Book’s estimate of the Weekly Average Sales rate
Black Book’s estimate of the Weekly Average Sales rate

“Despite most auctions continuing to operate under an all-digital platform, sales volume has rebounded to a level consistent with, and on some days higher than, this time last year. This is being driven by strong retail sales, which are then leading dealers to use auctions as their main source of inventory. The number of sales bottomed out around an 80 percent year-over-year decline when most auctions closed their physical sales (and some closed entirely) at the end of March.

“At the onset of the pandemic, as shelter-in-place orders went into effect, sales rates quickly tumbled into the teens, but rates have been climbing each week. We are now back at a level that is typically reserved for the springtime buying season.”

 

 

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Last modified on Wednesday, 24 June 2020 13:15

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