According to Kbb.com’s Blue Book Marketing Report for August 2012, luxury vehicles have suffered at auction as consumers have been less willing to pay premium prices for a used vehicle as values drop 7 to 10% from one year ago, surpassing the average industry decline of 5.4%.

Also, KBB.com’s Blue Book Marketing Report reported lease returns remain light and will not increase until Q1 2013; however, dealers have seen some relief from earlier-than-expected high rental car volume at auction due to a weak travel season.  With the economy improving at an anemic pace, consumers are travelling less often and for shorter trips.

Click here to read the Blue Book Market Report for August 2012.

This month’s report includes:  

NEW-CAR MARKET ANALYSIS

• Analysts Cautiously Optimistic on Future Vehicle Sales: Sales are on pace for the third consecutive year of double-digit gains and this certainly is reason enough to be optimistic.  Aiding sales are positive developments in both consumer debt service ratios and auto loan delinquency rates, which have been in steady decline for the past 6 to 12 months…

• New-Vehicle Demand Has Consumers Considering ‘Affordable’ Vehicles: If July is any indication of what to expect throughout the rest of the year and beyond, demand for new vehicles will continue to grow at a sluggish pace.  Informed consumers, still weary of an uncertain economic future, will continue to seek practical and affordable models as they look to upgrade their current vehicle.  With this in mind, dealers should focus on promoting vehicles that offer consumers the most value for the money…

• Mid-Size Cars, Compact Cars and Compact Crossovers Lead Consumer Interest and Sales: Sales of mid-size cars, compact cars and compact crossovers continued to lead the market in July, accounting for nearly 45 percent of all vehicles sold during the month.  These vehicles have resonated well with shoppers in need of affordable transportation offering top-notch fuel economy without sacrificing amenities… 

• Fuel Decline on Horizon: Although fuel prices recently have been on the rise, Kelley Blue Book projects cheaper gas ahead, perhaps below $3.25 per gallon by year-end.  U.S. crude inventories remain near a 20-year high, while fuel consumption steadily declined in recent years.  With the poor outlook for job growth and grim economy, fuel consumption will remain depressed…

USED-CAR MARKET ANALYSIS

• Buyers Opting for Fully Loaded Standard Sedans, Instead of Luxury Counterparts: Luxury vehicles have suffered at auction as consumers have been less willing to pay premium prices for a used vehicle as values drop 7 to 10 percent from one year ago, surpassing the average industry decline of 5.4 percent.  While values have been sliding, luxury vehicles have underperformed the market by a significant margin due to their high price point…   

• Weak Travel Season Provides High Rental Car Volume and Inventory Relief at Auction: Lease returns remain light and will not increase until Q1 2013; however, dealers have seen some relief from earlier-than-expected high rental car volume at auction due to a weak travel season.  With the economy improving at an anemic pace, consumers are travelling less often and for shorter trips.  This has had a direct impact on the rental car business, reducing demand for rental cars and prompting rental car agencies to trim their fleets…

• Despite Declines, Used Fuel Sippers Remain Top-of-Mind According to KBB.com Site Visitors: Although we expect values to soften through the rest of the year, dealers can rest assured that there are a handful of segments consumers are actively shopping on KBB.com.  Dealers planning to buy vehicles at auction should pay particular attention to mid-size cars and compact crossovers, since each of these segments have steadily increased in shopper activity from visitors to KBB.com… 

LATEST HOT USED-CAR REPORT

• M-Class is Best-in-Class: The 2010 Mercedes-Benz M-Class increased its traffic share more than any other used car during July: 42 percent month-over-month.  For those dealers who currently have the M-Class on their lots, it is currently valued at $13,500 less than the Fair Purchase Price of a brand new M-Class.  Consumers who shopped the 2010 M-Class in July also researched vehicles in the entry-level luxury segment…

ALL-NEW ‘BLUE BOOK MINUTE’ VIDEO 

In addition, this month we have created a video with Juan Flores, director of vehicle valuation for Kelley Blue Book, detailing the latest insights into the marketplace for July.  To view the latest video, click here.

Click here to read the Blue Book Market Report for August 2012.