Have SUV, Truck Prices Stabilized? Westlake Offers Its Insight

Following the recent period of unprecedented market price adjustments, Westlake Financial Services saw retention values increase by 19 percent on SUV sales in August, according to Bill Walters, Asset Control Manager at Westlake Financial Services.

Westlake specializes in older-model, higher-mileage vehicles, financing contracts in 34 states through a network of over 4,000 new and used car dealerships.

Walters noted that this spike in values in the vehicles his department remarketed at auctions across the country was tied to a variety of factors in the marketplace including the decline in fuel prices of up to a $1 a gallon in California and 40-60 cents per gallon elsewhere across the country.

“The increase in SUV valuations was the single best month over month increase of any vehicle grade we’ve remarketed in the seven years we’ve been doing this,” Walters said.

He added that September values for these vehicles was on par with August, meaning that following six months of rapid declines, the market for larger trucks and SUVs may have stabilized.

“Remember that the vehicles we remarket are considerably older, an average 2001 model year with 100,000 to 125,000 miles,” Walters said, “so some of this may not translate to late-model, lower-mileage vehicles.’

He said August may have marked a turning point for full-size truck and SUV values, but not only as a result of decreases in fuel prices. As the slowing economy and tightening credit standards are pushing more retail buyers down the credit and price-point scale, the vehicles become more valuable.

“Westlake, like most sellers at auction, has seen interest focused on smaller vehicles due to the uncertainty over even short-term fuel costs,” Walters said. “Now that gas prices have pulled back, buyers are moving back to full-

size SUVs and trucks.”

He said the rapid increase in gasoline prices lead to a “teeming frenzy” of consumers getting out of their SUVs and big trucks because of the uncertainty. As a result, dealers had no choice but to turn the truck and SUV inventory into cash, often taking huge hits at auction.

“The bigger question is whether this is the beginning of a turnaround in valuations or only a short-term reaction to over-corrected values and a reduction in gas prices,” Walters said.

“Only time will tell but this is a positive sign that a price point has been breached on total ownership cost beyond which there is significant de-

mand.”

He said seeing the numbers in September on par with those in August, adds credence to the turnaround theory.

Walters noted that in the remarketing business, you are only as good as what you brought in at the last sale, and predictions about the future are a best guess.

“Given the current economic uncertainty it’s even tougher, but I believe we have a strong tailwind as we’re seeing more people with dinged credit and dealers are seeing an increased demand for more affordable vehicles. This makes the vehicles we remarket more valuable.”