Watch the Track: Traders continue to brace for potential UAW strike Automatic remarketing Automatic remarketing
Black Book saw the decline in vehicle value slow by about half last week compared to the week before. Analysts said the reason may arrive on Thursday.
That’s when there is a potential strike involving factory workers against GM, Ford and Stellantis. Black Book said dealers are bolstering their inventories in case a prolonged labor conflict occurs and affects the availability of used vehicles.
Wholesale prices fell 0.75% last week, as the estimated average weekly sales rate rose to 50%. Black Book reported a week ago that wholesale prices fell 1.40%.
The Black Book said in its latest edition Market insights Released Tuesday, “This week is the week we’ve all been holding our breath for — will the UAW strike? If so, what will the impact be on the industry?”
“Market declines slowed last week in anticipation of news of a strike expected to occur later this week,” the analysts continued in the report. “Auction conversion rates rose last week, as buyers braced for a potential decline in inventory as a result of the strike. Although currency depreciation has slowed compared to the previous week, weekly declines are still well above typical seasonal movements.
After a week of auto prices falling 1.44%, Black Book reported that on a volume-weighted basis, overall auto sector values fell 0.89% last week.
With new car inventory likely to decline in the event of a prolonged strike, analysts noted that prices for cars between zero and two years old fell just 0.54%. Meanwhile, values of 8- to 16-year-old cars fell 1.09%, according to Black Book tracking.
Analysts noted that eight of the nine automotive sectors declined in value last week, with two of them recording declines exceeding 1%.
Small cars (down 1.21%) and midsize cars (down 1.10%) led the way. Black Book noted that compact cars have now seen six consecutive weeks of value declines with an average weekly decline of 1.81%.
Analysts added that the demand for the Chevrolet Corvette led to an increase in the value of luxury sports cars for the third week in a row. The latest rise was 0.28%.
“In smaller segments such as luxury sports cars, changes in individual models can have a significant impact on the overall segment change from week to week,” Blackbook said.
Meanwhile, in the trucks division, volume-weighted Black Book data showed that overall truck values fell 0.69% last week. That’s half what the downward move was a week ago, when truck prices fell 1.38%.
Moving similarly to cars for the same reason, Black Book noted prices for 0- to 2-year-old trucks fell 0.47% last week, while values for 8- to 16-year-old models fell 0.73%.
All 13 truck sectors declined in value last week, with four sectors still down more than 1% in value, analysts said.
This quartet included small crossovers (down 1.35%), subcompact luxury crossovers (down 1.03%), full-size luxury crossovers/SUVs (down 1.21%), and compact crossovers/SUVs (down 1.12%). .
Black Book reported that the decline in the value of full-size trucks has “slowed significantly,” with the sector falling just 0.30% last week. During the previous week, full-size truck prices decreased by 1.12%.
“All the focus this week will be on a potential UAW strike,” Black Book said, noting that the current contract expires Thursday. “Last week, we saw continued declines in the auto and truck sectors, which were lower than in recent weeks but still show that prices are moving lower.
“Auction conversion rates increased for the second week in a row and auction inventory stabilized,” the analysts continued. “Right now, we are not seeing an increase in inventory levels as much as we have seen in recent weeks.
“If a UAW strike occurs this week, we would expect to see wholesale prices begin to rise quickly as a result of less inventory coming to auctions,” Black Book went on to say. “That’s why here at Black Book, we have a team of analysts focused on keeping their eyes on the market, monitoring developing trends and gathering insights.”
