Flat Gas Prices Helped Stabilize Residuals, A Very Strong Year for Auction Volume September 24, 2014
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ALG: Residual Values Were Down Slightly Less than Expected

Eric Lyman
VP, Editorial and Consulting
ALG

ALG’s September/October report saw leasing residual values declining 1.6 percentage points (ppt) below the July/August report. That was lower than the expected 1.7-ppt decline. On the macro-economic front, the real durable goods spending forecast is up, with a +0.2-ppt impact on residual values; overall macro impact is up +0.1-ppts from the previous edition. Gasoline prices were nearly unchanged, which meant no vehicles had significant residual changes relating to gas prices.

Here’s the latest ALG Industry Report

Incentive Spending Was Up $44 Over Previous ALG Edition:
Rental fleet penetration was 10.9%, had zero percent impact on 36-month residual.

Used Vehicle Supply Forecast Rose for this Edition:
That caused a –0.1-ppt impact on residuals.

Segment Supply Had a –0.05-ppt Impact on Residual Values:
Segment supply changes varied, ranging from -0.2 ppts for Premium Sport, Premium Executive, and Midsize Commercial to +0.05 ppts for Premium Fullsize Utility
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Should Be Best Year for Auction Volume Growth in Over 10 Years

Dr. Ira Silver
NAAA Economist
National Auto Auction Association

For August, NAAA reports auction volume was up 4.8% over prior year, and 3.9% year-to-date. Increased dealer consignment volume from improved new vehicle sales in recent months and through the remainder of year will combine with continued robust commercial consignment. That should make 2014 the best year for auction volume growth in more than a decade. Last year was first year in which both dealer and commercial consignment increased since 2003.

See Dashboard and Dr. Ira Silver’s article on page 7 of On the Block

Dealer Consignment Growth Slowed this Year with New Sales Early in Year:
While commercial consignment remained strong due to lagged impact of strong
new sales growth early in economic recovery.

New Vehicle Sales Were Up 9.9% Over August 2013 and 5.1% Year-to-Date:
Used vehicle sales volume was down -6.5% over August 2013 and -0.5% YTD.

Expect New Vehicles Sales to Reach 16.5M this Year and 17M in 2015:
That comes from pickup in employment growth, pent-up demand, and very low financing costs.
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NADA on Why Used Vehicle Prices Declining

Down­ward price move­ment in August was more severe than what’s usu­ally recorded for that month, and NADA is watch­ing the impact of increas­ing incen­tives and trade ins.

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Varying Movement as the Leaves Are Ready to Fall

The typ­i­cal fall mar­ket is here with the value move­ment and num­ber of no sales, with one excep­tion – one increase greater than any week seen since July.

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