According to the Blue Book Market Report – December 2012, used-car values decline despite increased demand from dealers. Despite increased demand at auction from dealers in the Northeast, used-car values have declined steadily after a slight increase immediately following Superstorm Sandy.  During the weeks following the storm, Kelley Blue Book saw a modest bump in used-car values at auction as dealers, still uncertain as to the total extent of the damage, sought vehicles to accommodate an expected uptick in demand.

This month’s report includes:

NEW-CAR MARKET ANALYSIS  

• Replacement Demand Boosts Sales to 2007 Highs: New-vehicle sales surpassed 1.14 million units in November, which is a nearly 16 percent year-over-year increase.  This improvement pushed the industry’s closely watched seasonally adjusted annual rate (SAAR) beyond 15.5 million for the month, resulting in a five-year high.  As widely expected following Superstorm Sandy, demand from buyers in the Northeast region seeking replacement vehicles pushed sales above what can be attributed to typical seasonal patterns…
• New York and New Jersey Drive the Bulk of Sales Volume in November: Among the storm-impacted states, New York and New Jersey clearly experienced the most volatility in terms of new-vehicle sales.  The charts below reveal that sales in both New York and New Jersey dropped precipitously in the weeks immediately following the Superstorm Sandy.  After hitting bottom in the first week of November, sales ramped up quickly and currently remain well above their pre-storm pace…
• December to Cap Another Solid Year of Industry Sales Growth: December is among the strongest selling months of the year, and with the remaining high demand for replacement vehicles from residents of New York, New Jersey and other impacted areas of the Northeast, sales of new vehicles could surpass volume not seen since 2007.  Approximately 1.4 million vehicles were sold in December 2007, a strong finish to what is widely considered the last year of ‘normal’ industry sales.  From 1999 to 2007, vehicle sales averaged 16.8 million units per year, while this year sales will barely surpass 14.5 million sales…
• The Fiscal Cliff Looms Over 2013 New-Vehicle Sales Expectations: While December sales may meet or surpass the final tally of December 2007, this does not give any indication that 2013 will bring a return to 16 million-plus sales.  Once excess demand in the Northeast is fully satisfied, expect the industry to return to a more conservative high 14 million to low 15 million unit selling pace.  While the economy continues to improve moderately, the industry needs substantial gains in employment, wages and consumer confidence before sales will surpass 16 million units…
• Plenty of Options Available for Consumers Looking for a Great Deal in December: While replacement demand in the Northeast should help drive sales in December, the bulk of sales will come from buyers who are waiting to take advantage of year-end clearance events.  Consumers typically can find the best deals of the year in December, and Kelley Blue Book expects this year to be no different…
• Honda Civic and Toyota Corolla Continue to Lead White-Hot Compact Segment: Sales of compact cars were up 40 percent year-over-year in November, led by a record sales month for the Honda Civic.  More than 30,000 Civics were sold last month, a staggering 75 percent increase from this time last year.  Dealers worked to unload as many 2012 Civics as possible in preparation for the arrival of the significantly improved 2013 refresh…
• Japanese Manufacturers Continue to Dominate Top Vehicle Categories: Similar to the compact category, Japanese manufacturers have consistently dominated the sales charts in the mid-size car and compact crossover segments during the past five years.   Ford, General Motors, Chrysler, Hyundai and Volkswagen have aggressively pursued the Japanese by providing consumers with more competitive offerings.  By any sort of quantitative benchmark, automakers outside of Japan have succeeded in their attempt to compete with the best the Japanese have to offer…

USED-CAR MARKET ANALYSIS  

• Used-Car Values Continue Decline Despite Increased Demand from Dealers: Despite increased demand at auction from dealers in the Northeast, used-car values have declined steadily after a slight increase immediately following Superstorm Sandy.  During the weeks following the storm, Kelley Blue Book saw a modest bump in used-car values at auction as dealers, still uncertain as to the total extent of the damage, sought vehicles to accommodate an expected uptick in demand.  After the initial uptick, values have moderated, and today, values are generally following a normal seasonal depreciation pattern… 
• Used Value Declines Vary by Segment, Remain Better than 2011: While values declined by a scant 0.8 percent last month, movement at the segment level was mixed.  Luxury and subcompact cars led market declines, while full-size trucks and SUVs outperformed the market.  Soft values for luxury vehicles are typical at this time of year, as luxury automakers focus on the new model-year changeover by offering generous incentives on their previous model-year inventory… 

2013 RESIDUAL ANALYSIS

• Toyota Retains Top Brand Position for Second Consecutive Year; Most Segments Report Year-Over-Year Gains: The 2013 Residual Analysis Report is now available from Kelley Blue Book, www.kbb.com, the leading provider of new and used car information, including details about this year’s Best Resale Value Award winners.  Kelley Blue Book’s Best Resale Value Awards are based on projections from the Kelley Blue Book^® Official Residual Value Guide, determined by a skilled staff of automotive analysts.  Toyota’s entire lineup of 2013 model-year vehicles is expected to retain the greatest amount of its original value after the initial five years of ownership.  The luxury brand with the same claim is Toyota’s more refined sibling, Lexus… 

 LATEST HOT USED-CAR REPORT

• ‘Tis the Season to Shop Luxury: The holidays are here and shoppers are spending their merry time researching luxury vehicles.  At this time of year, shoppers are willing to open up their wallets and splurge.  Dealers also are offering outrageous deals to help clear out their inventories in December.  The top two segments that have benefited and received the largest gains are luxury sport utility vehicles and premium luxury cars, which have increased 6.4 and 5.0 percent in share of research activity (respectively)…