Black Book Trends

Surprises Found Inside the February 2020 Black Book Trends Report

If your used car dealership uses Black Book trends, then you know that they reported a modest rise month-over-month in sales (0.7%) in February. Interestingly, they also identified a couple of elements in its February Used Vehicle Retention Index that they found to be surprising.

What was so surprising? Trucks sales did not increase, but luxury vehicles did.

“The surprising change was the near-luxury car and luxury car segments that had the largest month-over-month change; however, these were no change and lower, respectively, on a year-over-year basis,” said Black Book senior vice president of data science Alex Yurchenko.

Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on 2- to 6-year-old used vehicles, as a percent of original typically equipped MSRP. It is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage, and condition.

Spring Buying Trends

  • Volume-weighted, overall car segment values increased by 0.05% this past week. This change is the largest positive change since the end of August 2019 at 0.06%.
  • Sporty Cars are continuing their upward momentum with another increase of 0.28%, as compared to the prior week’s increase of 0.38%.
  • Volume-weighted, overall truck segment (including pickups, SUVs, and vans) values decreased by 0.01% last week.
  • In trucks, the Sub-Compact Crossover segment increased for a fourth week in a row.

Now just a week or two of data point changes is not enough to change to spot a trend necessarily, but it is something worth keeping an eye on. As automakers like Ford ad Chevrolet kill off all their cars and switch to SUV’s the used car lots are the only option besides individual sellers to obtain a car vs. a truck or SUV.

For those dealerships banking on truck sales, take note that the subcompact truck segment saw increases for four weeks in a row. The midsized pickup segment in the US has grown for six consecutive years, and the total annual volume of new vehicle sales for this class has improved from 244,300 in 2013 to 639,200 in 2019, which is more than 2.5 times in those six years. Vehicles in this category include the Ford Ranger, The Jeep Gladiator, the Chevy Colorado, the Honda Ridgeline and the Toyota Tacoma.

‘Sporty Cars’ are also increasing in growth, which is another trend to watch. In a strong economy, more people are able to afford less practical things such as sporty cars. If you used car mix has avoided these in the past, it may be time to mix some sportier models into the mix.

As with any used car sales, there is no crystal ball to predict what to buy, remarket, and sell. But following the data week to week as closely as a stockbroker watches the stock market can show you areas where it might be worth taking a little risk with your floor plan.

Natural disasters

Is Your Auto Auction Operation Prepared For Disaster?

Tornadoes hit Manheim Nashville, and the Coronavirus hits the US. That sums up this week’s gloomy headlines, and both events, if they happen to you, could take your business offline for a sustained period of time. If this doesn’t have you asking what your business would do in the event of a catastrophe, you need to start making plans.

Matt Trapp, Manheim’s regional vice president for the East, confirmed in a statement that Manheim Nashville, located in Mount Juliet, was “severely affected by powerful storm conditions” that came through the area Tuesday. The auction remained closed as of Tuesday afternoon.

“While no one was injured at the site, our human resources team is now working diligently to account for the safety of every team member in the area. Our thoughts and prayers go out to those who lost their lives in the storm,” Trapp said.

“Currently, Manheim Nashville remains closed, as we assess the damage. As access to our property is restricted due to safety reasons, we encourage clients to refrain from visiting our site at this time. We will provide more updates as they become available at Manheim.com,” he said. “Manheim is committed to protecting the safety of our team members, clients, and guests.”

Nearby Music City Auto Auction of Nashville was unaffected and will continue operations, including its sale this week. With Manheim offline for a while, it will likely be a boon for smaller auction companies in the area.

When the Coronavirus first hit the world, it mainly affected China and swept through Asia and into Italy. It has taken a while, but it has now hit the US, albeit slowly. Companies are beginning to prepare for the possibility that the Coronavirus outbreak may become more widespread, and several big tech companies have started to tell employees they should work from home. Twitter, Google, Microsoft, Facebook, and Amazon have all given their employees instructions to work remotely for the time being if they can do so.

Amazon’s headquarters in Seattle is an area that has seen several deaths from the virus, and a worker there tested positive for the Coronavirus. Amazon is currently notifying others who may have had contact with that employee and has asked its Seattle employees to work from home.

Most small businesses don’t have a plan in place to deal with a public health crisis but now is the time to start building a roadmap to how your company might respond should a more widespread outbreak or a natural disaster should occur.

Financially, your Auction company should cover any loss to the building, the inventory, and maybe even loss of use. But does your insurance policy cover loss of revenue caused by a widespread health crisis? Probably not. It’s time to do a review of your insurance policies and contingency for cash flow.

Can your auto auction operate with employees working remotely? Perhaps it’s worth talking to a company that can stream your auction online. You may even consider doing a test at one of your upcoming auctions.

How is your data storage handled? How can employees access it? What channels will you use to communicate with your employees? Who is in charge of your media action plan, or do you even have one? Who will the media contact if disaster strikes your business in a high-profile way? The key is to make a plan now so that you’re ready when you need it.

Man sea rock horizon

5 Ways To Conquer Your Fear In Decision-Making

As the person responsible for the success of your business, making decisions for your dealership can be a daunting task. Even those who are at the top of their field can still get nervous when it comes to making decisions. You may feel like you don’t have enough data to make a solid decision, and that can add to the pressure to make a call. When the stakes are high, there’s risk involved with every possible choice. All of these are valid reasons to feel anxious about committing to something. That’s why we pulled together some ways you can conquer your fear during the decision-making process. Check them out below: 

 1) Review Past Successes 

It’s crucial that as you are prepping for a big decision that you reflect on past achievements you were able to accomplish for your dealership. Too often, we focus on the areas where things went wrong rather than focus on the areas where things went right. What were the steps you took to achieve those goals? And when there were failures, what did you learn and how did you move the business forward beyond that setback? Once you start to believe in what the dealership is capable of, nothing will stop you!

2) Don’t Forget To Breathe 

Too often, when we’re focused on making an important decision for any business, we forget to breathe. There may be local competition or market forces that are putting on the pressure for you to act fast. Very few wise decisions were ever made on impulse. You may need to step away from the process for a few minutes, hours, or even a few days, depending on how big the decision is. This reflection will allow you to regain focus and have a renewed sense of clarity before you finalize your decision. 

3) Recognize Potential Risks 

As you approach your decision, you’ll be able to recognize any potential risks. Depending on the situation, the riskier option may be the better choice if it reaps bigger rewards.  Big bets can lead to great success, but it’s important to have backup plans in place. It’s essential for each member of your team, across all impacted areas of the business, to understand the risks and know how to respond. There are really only 3 possible outcomes to prepare for: wild success, expected success, or lack of success. If you build plans against each of those outcomes in advance, there will be no time lost in trying to decide how to proceed when the results come in. 

4) Realize There Are No Wrong Decisions 

Anytime you’ve made a decision for the betterment of the dealership, it’s always been what you have felt was right in that exact moment with those circumstances. Even if some past decisions led to mistakes, you and your team learned from them and evolved. There’s no use to lamenting over what happened or what could have happened. When you decide your dealership is ready to evolve once again, realize there’s no such thing as a wrong decision, you’ll be much more confident in making the next one. 

5) Communicate

A dealership can be a big team across several different departments. Communication is critical during this time to make each team member feel like they play an important role in the decision-making process. Your employees need to feel valued, and soliciting input and information from them will also show honesty and integrity on your part. People like to feel like they are part of something and are valuable assets, not just there to do the work. The final decision is yours, but the process of sharing the challenge with others can give you perspective. You’ll gain more supporters encouraging you in your choices for the dealership by doing this as opposed to doing everything solo. After all, there’s no “I” in Team.