A Tough Moment for Automotive: Fewer than 15,000 Units Moved Through Wholesale Auctions in Most Recent J.D. Power Tracking Report

A milestone in the modern history of the automotive industry was hit during the first week of April, when fewer than 15,000 vehicles were sold through the national wholesale auto auction system, according to the most recent COVID-19 Valuation Services Update issued by J.D. Power this week.

"This has never happened before," says Jonathan Banks, VP Vehicle Valuations & Analytics of the Valuation Services Group at J.D. Power. "These are the kinds of weekly numbers that you would normally see out of a single large state -- like California. This represents a 37% decline in wholesale volume from the week ending March 29. It is an 87% drop from average weekly pre-virus auction sales of approximately 113,000 units," he says. (EDITOR'S NOTE: see weekly wholesale auction volume chart).

After falling by an average of more than 6% over the two weeks prior, auction prices fell a further 2.6% the week ending April 5. This meant that auction prices finished the week 14%, or $2,100, lower than the pre-virus J.D. Power forecast during a period of time that typically sees the strongest wholesale prices performance.

Meanwhile, used sales at franchise dealers fell 24% the week ending April 5. For the full month of March 2020, retail sales were down 32% versus February 2020 and was down nearly 40% versus March 2019.

A Silver Lining in Retail Price Stability

A sliver of good news could be found, however, in retail used vehicle pricing. Used retail prices continued to hold up better than wholesale prices, with retail prices falling just 1% the week ending April 5 when compared to the week prior (on a mix adjusted basis). For March 2020, used retail prices were up 0.6% versus February 2020.

"Of course, you have to look at this performance in the context of volume. While large luxury SUV prices actually rose by 4% over the week ending April 5, however, only 100 units were sold during this period," explains Banks.

On the retail sales front, used sales at franchise dealers fell 24% the week ending April 5, continuing a downward trajectory. Retail sales for March 2020, retail sales were down 32% compared to February 2020.

Looking Ahead: Bottom to Hit in June With Partial Recovery by December

J.D. Power expects substantial volatility in the used vehicle market to continue into the summer and early fall. The current outlook calls for used prices to fall by 7% through June 2020 before beginning to recover.

The outlook is centered on macroeconomic expectations, particularly the expectation that the country will experience significant job losses through the second quarter, followed by a gradual recovery in the second half of the year. Currently, the forecast has prices falling by 2% on a full-year basis versus 2019.

(To read the entire COVID-19 Valuation Services Update from J.D. Power visit: https://bit.ly/2VuGXAy)