BLUE BOOK Market Report MARCH 2011 $3.30
Total Page:16
File Type:pdf, Size:1020Kb
www.kbb.com In This Issue: MARKET ANALYSIS Gas Prices Spark Demand for Fuel-Efficient Vehicles; High-End Luxury Takes a Backseat; More BLUE BOOK MARCH RESIDUAL ANALYSIS 2011 Peak Fuel Prices Are Not Market Report Sustainable Analysis from Kelley Blue Book’s Analytic Insights Team LATEST HOT USED-CAR REPORT Annual Subscription Value: $500 Kelley Blue Book Public Relations Contacts: Robyn Eagles | Director, Public Relations Joanna Pinkham | Senior Public Relations Manager Brenna Robinson | Public Relations Manager 949.268.3049 | [email protected] 949.268.3079 | [email protected] 949.267.4781 | [email protected] MARKET ANALYSIS: Lack of Good-Condition Vehicle Supply Continues to Drive Market Strength - Alec Gutierrez, manager of vehicle valuation, Kelley Blue Book long with the New Year came increased sales and strength in the marketplace, providing the automotive industry with hope as the market moves toward a slow recovery. This strength continued into February with supply remaining a concern A among dealers. Overall used-car values rose 0.8 percent for the month, building upon the solid gains reported in January. Since the beginning of the year, values have increased 1.4 percent, driven predominantly by an overall lack of supply in good- condition, late-model vehicles. As dealers returned to auction in January after a seasonal fourth- YTD Change by Segment quarter lull, they bid up auction values in an effort to stock up (MY08-10) inventory with vehicles consumers’ desire most. In the past, dealers Hybrid Pickup Truck 6.0% went to auction with plans to fully replenish their inventory, buying Hybrid Crossover 4.7% large quantities of vehicles to ensure a full lot. Dealers were less Compact Crossover 4.5% concerned with days to turn and focused only on having a variety Compact Car 4.3% Mid-Size Crossover 4.3% of vehicles in inventory to satisfy consumer preferences. In today’s Subcompact Car 3.4% environment, dealers are reluctant to buy vehicles that they won’t be Mid-Size Car 3.3% able to sell within 30-45 days. In recent conversations with dealers, Hybrid Sport Utility 3.0% Kelley Blue Book increasingly is hearing that dealers are only buying Hybrid Car 2.5% vehicles that they have customers lined up to buy. With so much Full-Size Car 2.2% information available online, consumers are able to scour the Web Luxury Crossover 2.0% to find a vehicle that best fits their needs. With this in mind, dealers Luxury Sport Utility 2.0% need to be cognizant of changing consumer demands, ensuring they Full-Size Crossover 1.9% are buying the right cars at the right time. Mid-Size Sport Utility 1.8% Full-Size Pickup Truck 1.6% A dealer that offers affordable, fuel-efficient vehicles will do well with Full-Size Sport Utility 1.5% today’s rising gas prices. The dealers that will be most successful are Van 0.0% those who purchased fuel-efficient vehicles during the first month Mid-Size Pickup Truck -0.1% of this year, as well as those who educate consumers with the fact Sports Car -0.5% Minivan -0.7% that you don’t need to give up interior space to get more miles per Luxury Car -1.1% gallon. Drivers do not need to move toward small, sub-compact models to achieve fuel efficiency, as there are several efficient full-size -3.0% -1.0% 1.0% 3.0% 5.0% 7.0% car and crossover options. Moving forward, dealers must consider the changing economic conditions in their market and the potential impact they have on the purchasing habits of consumers. The information age can be a double-edged sword for dealers, providing them with market insights never before available, while simultaneously providing consumers with the information they need to be as informed as the most seasoned industry veterans. The dealers that will remain in business in the long run are those who are able to utilize all of the resources available so that they can better predict the future needs of consumers, as opposed to the current needs of today. MARKET ANALYSIS: continued Gas Prices Spark Demand for Fuel-Efficient Vehicles any are wondering just how high gas prices will rise, and how long they will remain inflated. Retail gasoline prices started the year at $3.07 and currently sit at $3.52 nationally. While gas prices have been on the rise around the United States, M depending on where you live it could be costing you more than in other parts of the country. Most notably, West Coast gas prices are significantly higher than the rest of the country. In fact, according to Kelley Blue Book field analysts, it has gotten to a point where fuel-efficient vehicles are being shipped to the West due to higher demand relative to other parts of the country. This could be a short-term phenomenon as gas prices in the rest of the country continue to creep up and demand spreads elsewhere. Retail Gasoline Prices by Region Gas Prices by City as of 3/7/2011 $5.00 National East Coast Gulf Coast $4.00 $3.92 $3.89 Midwest West Coast $4.50 $3.90 $3.80 $4.00 $3.68 $3.70 $3.64 $3.65 $3.50 $3.60 $3.55 $3.48 $3.00 $3.50 $3.46 $3.38 $2.50 $3.40 $3.30 $3.30 $2.00 $3.20 $1.50 Gas Prices as of 3/07/2011 $3.10 National East Coast Gulf Coast Midwest West Coast $1.00 $3.52 $3.50 $3.40 $3.49 $3.77 $3.00 $2.90 San Los Chicago Seattle Miami New York Cleveland Boston Houston Denver Jul 11, 2005 Jul 24, 2006 Jul 12, 2010 Jan 03, 2005 Jan 16, 2006 Jan 29, 2007 Jan 04, 2010 Jan 17, 2011 Jun 04, 2007 Jun 16, 2008 Jun 29, 2009 Oct 08, 2007 Oct 20, 2008 Apr 02, 2007 Apr 14, 2008 Apr 27, 2009 Sep 12, 2005 Sep 25, 2006 Feb 11, 2008 Feb 23, 2009 Sep 13, 2010 Dec 10, 2007 Dec 22, 2008 Aug 06, 2007 Aug 18, 2008 Aug 31, 2009 Nov 14, 2005 Nov 27, 2006 Nov 02, 2009 Nov 15, 2010 Mar 07, 2005 Mar 20, 2006 Mar 08, 2010 May 09, 2005 May 22, 2006 May 10, 2010 Francisco Angeles City Source: EIA Source: EIA Instability in the Middle East has sparked fears of production halts, contributing to the rapid rise in fuel prices. According to Libya’s National Oil Corporation Chairman Shokri Ghanem, the country’s oil production has been cut in half. Libya currently is the world’s 15th largest crude exporter, producing 1.2 million barrels per day. Although Libya’s oil production does not account for a significant portion of global production, we should not discount the impact of a prolonged decline in the country’s production. If there is a bright side to the situation, a decline in Libya’s production could be absorbed by Saudi Arabia. Saudi Arabia currently produces eight million barrels per day with a capacity of up to 12.5 million barrels of oil per day. Unrest in Libya has not yet drastically impacted global supply; however, traders fear that the instability in the region could spread to Organization of the Petroleum Exporting Countries (OPEC) heavyweights such as Iran and Saudi Arabia. This is the key to rising gas prices. If this unrest does not spread into Saudi Arabia or Iran, then the current rise in gas pricesGas Pricesmay as of 3/07/2011be short- National East Coast Gulf Coast Midwest West Coast lived. Global supply and demand remain relatively balanced, so in the long run fuel prices could come down.$3.52 In$3.50 the short$3.40 $3.49 $3.77 run, consumers should prepare to continue to pay a premium at the pump, at least through 2011. The Energy Information Administration’s (EIA) long-term forecast projects gas prices to remain around $3.56 per gallon nationally through 2011, with a 25 percent chance of gas hitting $4.00 per gallon in the summer. Until the uncertainty in the Middle East begins to subside, consumers should expect to continue to live with high gas prices. 2 BLUE BOOK Market Report MARCH 2011 $3.30 MARKET ANALYSIS: continued Gas Prices Spark Demand for Fuel-Efficient Vehicles (Continued) U.S. Imports of Crude Oil vs. Ending Stocks 1,200,000 16,000 14,000 1,000,000 12,000 800,000 10,000 600,000 8,000 6,000 400,000 4,000 Gas Prices as of 3/07/2011 200,000 National East Coast Gulf Coast Midwest West Coast 2,000 $3.52 $3.50 $3.40 $3.49 $3.77 Weekly U.S. Ending Stocks of Crude Oil U.S. Ending Stocks of Crude Oil (thousands of barrels)of (thousands Oil Crude of Stocks Ending U.S. Weekly U.S. Net Crude Oil Imports per day) barrelsof (thousands Imports Crude Oil Net U.S. 0 0 Jul 26, 1996 Jul 10, 1998 Jan 03, 1992 Jan 31, 2003 Jan 14, 2005 Jun 23, 2000 Jun 07, 2002 Oct 29, 1999 Oct 12, 2001 Apr 23, 1993 Apr 07, 1995 Apr 18, 2008 Apr 02, 2010 Feb 16, 2001 Sep 26, 2003 Sep 09, 2005 Dec 17, 1993 Dec 01, 1995 Dec 29, 2006 Dec 12, 2008 Aug 28, 1992 Aug 12, 1994 Aug 24, 2007 Aug 07, 2009 Nov 14, 1997 Nov 26, 2010 Mar 21, 1997 Mar 05, 1999 May 21, 2004 May 05, 2006 Source: EIA t this time, Kelley Blue Book recommends that consumers who do not absolutely need to replace a vehicle wait for gas prices to come back down.