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April 12, 2017


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March 11, 2017

Introduction Historically, wholesale vehicle values experience seasonality; prices increase during the spring and decrease during the rest of the year, particularly in the fall. Due to this seasonality, some consignors hold vehicles at the end of each calendar year in anticipation of achieving higher price retention in the spring. To assess how this strategy might work in 2017, we analyzed wholesale vehicle values for 3-year-old vehicles over the course of calendar years 2014-2016. We found that spring season price “bounces” have become successively smaller and fall season depreciation successively larger over the past two years. If these trends continue into 2017, then consignors should consider selling vehicles now rather than waiting for the spring. Findings:  Auction volumes have been increasing year-over-year since 2013 (Figure A1)  Spring price “bounce” has decreased over the past two years – 2016 spring “bounce” averaged 1.3% between Jan-April for 3-year-old models (Figure 1)  Fall depreciation has accelerated over the past two years – 2016 fall depreciation averaged -7.1% between Sept-Dec for 3-year-old models, equivalent to -2.4% per month  If these price trends continue into 2017, then there are two key implications for consignors: o Vehicle depreciation may be greater in 2017 than in recent years o Holding vehicles for the 2017 spring season may be detrimental to consignor performance Recommendations: To avoid the current market’s accelerated vehicle depreciation, consignors should consider these strategies:  Do not hold vehicles for spring 2017 – the best time to sell is now!  Price vehicles to sell – vehicles depreciate every day that they sit on the lot  List vehicles online in between physical sale events – minimize offer downtime and expose vehicles to an expanded buyer base  Reduce prices on repeated no-sale vehicles – if a vehicle isn’t selling, it’s likely over-priced

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