Hot Wholesale Used-Car Prices Could Slide as Demand Cools

First Up 08/31/20

Hot Wholesale Used-Car Prices Could Slide as Demand Cools

Wholesale used-vehicle prices, on fire for several weeks after initially plummeting in the spring, could finally be cooling off even as retail used-vehicle prices steadily climb, reports Automotive News. For the week ended Aug. 23, wholesale auction prices dipped by an average of 0.7 percent, according to J.D. Power. That marked the first material decline since the week ended April 23 and the second consecutive week that wholesale prices were flat or down, the company said. Wholesale used-vehicle prices roared back this summer after plummeting in April following the start of the pandemic. Though still high, they are showing signs of cooling off, according to J.D. Power numbers comparing used-vehicle prices for the week ended Aug. 23. Cox Automotive Chief Economist Jonathan Smoke said last week that used-vehicle supplies, after rapid declines this spring and summer, have "settled into a consistent level of supply over the last few weeks." Retail supply was at 38 days as of Tuesday, Aug. 25, below the 44-day norm, Smoke said. Wholesale supply was "normal" at 24 days. Read more here (Source: Automotive News).

Hurricane Laura's Impact on Gulf Coast Dealers, Supply Unclear

Automotive News reports that dealers in southwestern Louisiana and parts of eastern Texas spent late last week assessing the damage from Laura, which came ashore Thursday, Aug. 27, near Cameron, La., as a Category 4 hurricane with 150-mph winds. At least six people were killed, according to the Associated Press. Laura later weakened to a tropical depression. Strong winds from the storm damaged signage, and the roof of the body shop, left, “was barely hanging on by a thread,” Phillip Tarver said of his Lake Charles Toyota dealership. The hurricane's winds cut electricity and damaged buildings while some flooding occurred in southwestern Louisiana, including near the city of Lake Charles. For dealerships, the hurricane arrived at a time of low used-vehicle inventory and high prices because of the ongoing coronavirus pandemic. Automakers continue to ramp up vehicle production after U.S. auto plants shut down for several weeks in the spring as cases of COVID-19 soared. Dealers have reported difficulty keeping popular models in stock as demand rebounded and state restrictions on business activity eased. Read more here (Source: Automotive News).

Mitsubishi Motors Executive Behind Nissan Alliance Dies

According to U.S. News and World Report, former Mitsubishi Motors Chief Executive Osamu Masuko, who engineered the Japanese automaker’s alliance with Nissan, has died. He was 71. Masuko was named a special adviser to the company when he resigned for health reasons as of Aug. 7. Mitsubishi Motors Corp. said he died of heart failure on Aug. 27. Masuko joined with former Nissan Chairman Carlos Ghosn in forming an alliance in 2016. After he was named president of Mitsubishi Motors in 2005, Masuko worked hard to rebuild its brand image, which had been hammered by a massive, systematic and decades-long cover-up of defects that surfaced in the early 2000s. Calm and soft-spoken, Masuko came to symbolize Mitsubishi Motors' revitalization. Masuko had said he was stunned and saddened by Ghosn's arrest. “I still can’t figure out why, and I just don’t understand,” he told reporters then. Read more here (Source: U.S. News and World Report). 

Amazon Orders 1,800 Electric Vans From Mercedes for Deliveries

Amazon announced Friday that it has ordered more than 1,800 electric vans from German automaker Daimler’s Mercedes-Benz unit as part of its bid to become carbon-neutral by 2040. According to CNBC, the company said the order consisted of 1,200 of Mercedes’ larger eSprinter models and 600 of its midsized eVito vans. It’s not clear how much Amazon paid for the vehicles. Amazon said the move was part of its aim to meet the goals of the Paris climate agreement a decade ahead of schedule. President Donald Trump infamously pulled the U.S. from the accord — which is designed to prevent global temperatures from rising over 2 degrees Celsius above pre-industrial levels — back in 2017. “We welcome the bold leadership demonstrated by Mercedes-Benz by signing up to The Climate Pledge and committing to ambitious action to address climate change,” said Amazon CEO Jeff Bezos. “We need continued innovation and partnership from auto manufacturers like Mercedes-Benz to decarbonize the transportation sector and tackle the climate crisis.” Read more here (Source: CNBC). 

U.S. Attorney Sets End-of-Year Goal for UAW Reforms, Wants Union to Run Itself

U.S. Attorney Matthew Schneider wants to settle the issue of UAW reforms by the end of this year, reports The Detroit Free Press. A time frame for ending the ongoing corruption investigation, which he said includes both Ford and Fiat Chrysler Automobiles, is less clear. While the U.S. Attorney's Office and the UAW can hammer out the details of reforms within a specific amount of time, criminal investigations don't follow the same process, Schneider said, noting that his office continues to get tips. But a federal takeover of the UAW in reaction to the corruption probe appears less likely now than it once might have. "We can set a goal to get (the reforms) resolved by the end of this year . . . by the end of 2020 we have the union in a good place with good leadership," Schneider said Thursday. "I don’t want to run the union. My goal is to get the UAW in a position that it runs itself and that the leadership of the UAW is not corrupt." Schneider, calling the discussion "very cordial," indicated that he had a "really good meeting" with UAW President Rory Gamble on June 30. Read more here (Source: Detroit Free Press). 

Federated Insurance's Claim of the Month: Could It Happen to You?

In anticipation of a hurricane, a dealership moved more than 200 vehicles inland and out of a possible flood area. The dealership itself flooded in the deluge; water was 18 inches high throughout the property. However, the business avoided millions of dollars in damaged vehicles thanks to their quick reaction.

AVOIDED CLAIM: More than $5 million

Hurricane season is in full swing. If you decide to make moving your vehicles part of your disaster-preparedness plan, here are some tips: 

  • Identify a location to move your vehicles in advance.

  • Prepare your employees for the possibility of having to drive vehicles out of harm’s way before a storm nears. 

  • Appoint a member of management to plan the effort and keep it organized, directing employees and keeping track of inventory.

  • Move your vehicles only when it’s safe. If the storm is raging, the safest place for your employees is in a storm shelter.

Visit or contact your local marketing representative for resources you can use to create or enhance your own risk management program.

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Some Cars Will Never Be Crash Tested. Here's What to Do If You Want One. [Consumer Reports]

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