Black Book, a division of Hearst Business Media that provides used vehicle valuation and residual value forecast solutions, announced today the Black Book Used Vehicle Retention Index, designed to offer an unbiased, accurate view of the strength of today’s used wholesale auto market values. Click here to obtain a copy of the latest Index.
According to a press release, the Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on two- to six-year-old used vehicles, as percent of original typically-equipped MSRP. Black Book’s wholesale average is a benchmark value for used vehicles selling in the wholesale auctions with the vehicle quality in Average condition. The index is weighted based on used vehicle registration volume and adjusted for seasonality, vehicle age, mileage, condition, segment mix, and inflation (MSRP).
Aggregated from daily vehicle value updates, and captured throughout hundreds of wholesale physical and online auto auctions across the country, the Black Book Used Vehicle Retention Index represents data across all regions of the U.S. The Index is based on a comprehensive list of vehicles included in the Black Book wholesale database, and includes no bias toward any brand, auction or region, ensuring a more accurate reporting of the used vehicle market.
The Index dates back to January 2005, three years prior to the beginning of the economic recession, where Black Book published a benchmark index value of 100.0 for the market. In March of 2017, of the index scored at 115.9, indicating a 16% increase in used vehicle retention strength since 2005. That being said, the index has fallen steadily since October 2015, when it registered a score of 127.0. This recent trend illustrates a continued, slow, weakening of the used-vehicle market as a result of cresting demand and increased supply in the used market.
As more two- to six-year vehicles return to the market in the coming years, this Index provides an overall measurement of strength/weakness in wholesale used vehicle value retention. During the recessionary period, the Index experienced a sharp drop of about 14% from Jan. 2008 to Jan. 2009. In 2010, the Index recovered nicely and gained 10% during the year. After the recession, the Index continued to rise persistently until 20111 and remained high till 2015. The Index lost 6% in 2016. The Index is expected to continue its slow decline in 2017 as the used vehicle market loses strength.
When broken down by segments, the index shows some interesting trends, especially comparing two contrasting vehicle segments. Compact car values have continued to decline sharply during the last two years due to the lack of consumer demand aand higher supply for these vehicles. On the other hand, full-size SUV index values are currently near all-time high.
“Automotive professionals today base critical, profit-dependant decisions on accurate, unbiased data that offers clear insight into the market,” said Anil Goyal, senior vice president of Automotive Valuation and Analytics at Black Book. “The Black Book Used Vehicle Retention Index represents the industry’s guide into the strength of the market, with no bias.”