- Mar 15, 2023, 11:30 AM CDT
Auto dealerships are encountering a major problem where auction prices are increasing while real book values stagnate, squeezing profitability. expanded on our tweet, pointing out that Manheim wholesale auto prices are re-accelerating while other indexes tracking prices were flat. Dealers ARE paying more for cars. A LOT more. But the issue dealers are running into is SELLING those cars.
JD Power - one of the industry's main sources of Vehicle Book Values that auto lenders rely on to value collateral - hasn't materially adjusted upwards. dealers high-and-dry and without a profitable outlet for all the inventory they just acquired for OVER book value. while hoping to make it up on the back-end . our vehicle purchase price has slightly RISEN but our ASP has barely budged. Cars are appreciating again and this presents problems for both dealerships and consumers.
. There hasn't been a tax season where we've seen wholesale prices for mainstream, bread-and-butter cars at [Book values are current wholesale and retail market price estimates provided by various publishers, such as NADA, Kelly Blue Book, Black Book, JD Power, and other companies] A 2016 Honda Civic LX with 68K miles was listed with an auction value of $15,800 and sold for $16,100. The JD Power book value is listed at only $12,925 for clean and $12,050 for average conditions. This is a we are talking about. See what's wrong here? While wholesale prices have been increasing for 3 months, book values haven't caught up yet!increasingly common occurrence. There's no"water" in the deal from the get-go.
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