Conversion rates at auction soften with more options in the lane

Conversion rates at auction have softened below 60%, with dealers and buyers concentrating on more retail-ready models, while wholesale prices continue to dip.

Leading off: According to BlackBook’s Market Insights, conversion rates dropped 3 points in the past week to 58%.

The wholesale market saw prices drop by 0.69% this week following a 0.72% drop the week before.
Trucks and SUVs fell 0.77%, or $152 this week, and cars dropped 0.45%, or $77.

Room to choose: Laura Wehunt, BlackBook Vice President of Data and Analytics, told CDG News the lanes remain “healthy and active.”

Buyers are competing for “clean-condition, clean-mileage, higher-content, and retail-ready vehicles,” she said.
“Additional late model inventory is coming through the auctions, which gives buyers additional choices and reduces the need to stretch on an average example when another clean, well-equipped unit may be coming later in the sale,” Wehunt explained.

Large declines: Full-size crossover SUVs between 2 and 8 years old fell by 1.35% this week, compared with late models in the category falling by 0.79% and older models by 0.75%.

It was the 19th straight week of price declines in the category.
That same age group of full-size pickups, 2- to 8-year-old, dropped by 1.21%.
Wehunt noted diesel prices have decreased demand on some 2500 and 3500 trucks.

“Within the truck market, we are also seeing a higher mix of higher-mileage and average-condition units coming through the auction lanes, while overall truck volume has continued to increase week over week,” Wehunt said. “That additional supply gives buyers more choices and reinforces the selective buying behavior we have been observing. At the same time, stronger pricing support for current-model-year and one- to two-year-old trucks has created additional pressure on older inventory.”

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Late models, older vehicles holding value: Among most models, newer vehicles and older vehicles are depreciating less than those in the middle.

Across nine car segments followed by BlackBook, 0- to 2-year-old cars were down 0.39% and those older than 8 years fell 0.27%.
Among the 13 truck and SUV categories, 0- to 2-year-old models fell 0.45% and those 8 to 16 dropped 0.57%.
Wehunt points out that wholesale buyers are considering purchase price, reconditioning costs, marketability, and retail return in buying decisions.

“Late-model inventory continues to attract demand because it offers an attractive alternative to buying new, but buyers are no longer automatically paying a premium simply because a vehicle is newer,” Wehunt said. “At the other end of the spectrum, older inventory can continue to attract buyers because of its lower purchase price, although performance still varies significantly based on condition, mileage, and configuration. The result is that parts of the market can experience greater pricing pressure when wholesale prices no longer align with expected retail demand.”

Takeaway for dealers: The wholesale market continues to see prices fall, presenting value for dealers. But it depends on vehicle model, age, mileage, and condition.

“The biggest takeaway from what we are seeing is that pricing dispersion continues to widen,” Wehunt said. “Buyers remain active, but they are placing much greater emphasis on condition, mileage, configuration, and retail appeal than they were earlier this year. As a result, two otherwise similar vehicles can produce very different wholesale outcomes depending on their individual attributes.”

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