As 2017 wound down, Black Book wanted to make a unique comparison. The editorial team looked at how much of an impact Hurricanes Harvey and Irma placed on vehicle prices and the ability to retain values against an incident where a similar amount of used units left the market.
The comparative occurrence came eight years earlier during the federal government’s Car Allowance Rebate System program; better known as “Cash For Clunkers.”
According to Black Book, during the three-month period between July and September of 2009, roughly 690,000 older-model vehicles were replaced during “Cash For Clunkers.” Black Book indicated overall used-vehicle value retention increased 3.4 percent during that span.
During the three-month period between August and October of 2017, Black Book estimated 700,000 vehicles were damaged or destroyed during Hurricanes Harvey and Irma. Editors then found that the overall used-vehicle retention increased by a lower figure; 1.8 percent to be exact.
After uncovering the data, Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics, reflected back on the timeframes.
“While the health of the overall economy and automotive sales environment was significantly different between the two time periods, it’s interesting to see that the hurricanes had a similar effect on used-vehicle values compared with the government’s rebate program in 2009,” Goyal said.
Perhaps to a degree, “Cash For Clunkers” triggered the move toward more economical CUVs and SUVs that dealerships turn with more regularity nowadays as compared to compacts and midsize sedans.
Back in early 2010, Experian Automotive pointed out that the industry produces more than 60 trim levels of vehicles that fell into those segment. The company’s data at the time also showed when comparing new-vehicle registrations in the fourth quarter of 2009 to the same period of the previous year, three of the top five categories with the highest gains were CUVs.
Fast forward to 2017, Black Book watched its Used Vehicle Retention Index rise in November, pushing the reading higher for the third consecutive month. Editors noticed nine segments saw increases in the index during November, including, compact crossover/SUV, midsize crossover/SUV and midsize luxury crossover/SUV
“The continued strengthening of the index indicates 2017 has been a little stronger than expected for used cars and trucks, helped along the way by the hurricane replacement activity,” Goyal said.
“Any continued strengthening over the next few months will mean we’re getting an early jump at the oncoming tax spending season, when consumers use their checks to replace their vehicles in the spring,” he continued.
What might trigger price movements eight years down the road? Perhaps, the spark of value movements won’t necessarily be associated with the segment, but rather rather how the unit is powered as Moody’s Analytics highlighted about residual values for electric vehicles during this webinar with AuSM.