Have you ever been to a fortune teller? Fortune tellers predict your future and let you know how your love life, financial situation, and other events will turn out. The same way fortune tellers can predict someone’s future, experienced auto auction owners can predict where the auto auction market is headed.
For almost 20 years, Big Valley Auto Auction has gone through numerous market changes. From big spikes in inventory to dips in the market, we’ve helped buyers and sellers stay up to date during these shifts. And throughout this time, we’ve noticed yearly patterns that tend to never change.
In this article, you’ll learn the condition of the current auto auction market, the direction it’s headed in, the factors that determine that shift, and how dealers can prepare to finish off the year strong.
What is the Current State of the Auto Auction Market?
As of September 2023, the current state of the auto auction is recovering from the annual slow period between the Summer months of June-August. For Big Valley Auto Auction, there has been an increase of approximately 10% in inventory. Attendance for our in-lane and online sales are also going back to normal and lots are starting to fill up and return to pre-COVID numbers.
The COVID pandemic had a big effect in the automotive industry throughout 2020 and 2021. When the government gave out $1,200 stimulus checks, some people put that money towards buying vehicles. As this steady climb back to pre-COVID numbers continues, new car inventory is being built back up.
However, it’s going to be a steady return, rather than a huge spike. The Rio Grande Valley area in south Texas doesn’t get huge spikes or dips in the market. Bigger cities in Texas, such as Dallas and Houston, get hit more than smaller cities like Donna and Weslaco. When the market is hot, bigger cities are affected most, whereas the Rio Grande Valley is more of a slight impact.
What Factors Influence the Direction of the Auto Auction’s Winter Market?
Based on past years, we’ve realized that there are 4 factors that influence the direction of the auto auction’s market in the Winter.
Gas Prices
The biggest factors that influence the auto auction market are the economy and gas prices. How much you’ll spend on gas to fill up a specific car plays a role in your decision to buy that car. For example, if diesel is $5.00 a gallon, vehicles that run on diesel will not sell well.
Cars with good gas mileage, such as Nissans and Toyotas, will be more desirable. In Texas, trucks are a safe investment for the Winter, as they are always in demand. However, big trucks will not sell as well when gas prices are high.
Location
Location is another factor that affects the market. Market value of vehicles primarily depends on location. If you’re trying to sell trucks, you’re better off selling them at a Texas auto auction, where trucks are popular. However, if you’re looking for electric vehicles, you’ll have a better chance finding them in California.
The weather in that location also plays a role. Places that get snow, such as Colorado, will see an increase in 4x4 vehicles and larger SUV sales, as those vehicles are capable of getting through snow.
New Models
As electric vehicles become a new trend, 2023 vehicles will begin to fall behind. New car stores have rebates for 2023 vehicles, because 2024 cars are coming in, which causes trade-ins. Prices for current or previous models are also not as crazy, because dealers are trying to get rid of older models, to make space for newer vehicles.
Online Engagement
While we can’t speak for other auto auctions, we’ve seen that our overall online engagement has continued to increase year over year. In Texas, winter is usually not as cold as other parts of the United States, so weather may not play a big factor in our online engagement. However, if your auction is located in a cold area, online engagement would probably be higher because more people may prefer to bid online, in the warmth of their home or office.
How Should Auto Auction Dealers Prepare for the 2023 Winter Season?
There are 4 things sellers can do to prepare and 2 things that buyers can do.
Sellers:
Check the Market Report
If you’re a seller, you should always figure out what the actual market value is for your inventory. Just as the market changes, the popularity of vehicles does, too. Check the market value for your inventory and see where you can get the best deal.
Keep Your Vehicle Clean
Reconditioning and cleaning up your vehicle is a good investment to prepare your inventory for auction day. Having a nice, clean car, makes it look more appealing to buyers, which could potentially lead to more of a profit.
Sell As Soon as You Can
If you decide you don’t want to lower your asking price and keep your inventory, don’t hold on to it for too long. The longer you hold on to your inventory, the faster it loses value. If you bought a vehicle for $10,000 and it wasn’t worth that to begin with, it’ll be worth less as time goes on.
Price Accordingly
And while profit is the goal, you still need to price accordingly. Don’t price too high, because asking too much for a vehicle may scare away buyers. Although you may have spent a lot of money on your inventory, buyers usually do not consider how much you paid for it. It’s only worth its current market value and that’s the amount buyers are willing to pay.
On the flipside, avoid pricing too low. That $10,000 vehicle may be worth that exact price or more. Instead of playing it safe and pricing it at $8,000, check the market report and make sure you know the value of your vehicle. Don’t lose out on potential profit.
Buyers:
Check the Market Value
It’s always smart to do your homework before coming in. Similar to sellers, researching the current auto auction market and learning the market value of the vehicles being sold will help you show up to auction day prepared with the right budget.
Don’t Get Too Emotional
Just because you’re prepared for auction day doesn’t guarantee you’ll stay focused the whole time. One mistake buyers make is getting emotional over a vehicle. Sometimes, buyers get caught up in the excitement and are so determined to win that they’ll continue to bid until the vehicle is theirs. If you have enough money to do so, then it’s probably not a big deal. But if you don’t, this will lead to you overbidding and spending money that you didn’t plan on spending.
If you have a set budget and the price for the vehicle goes higher than that, move on to the next one. Don’t go over your budget, because this could lead to you losing money and having an overall bad auto auction experience.
Am I Prepared to Attend Auto Auctions in Winter 2023?
If you don’t believe in fortune tellers and their predictions, then our predictions may not have much meaning to you. However, if you trust past trends and auto auction history, you might want to keep these predictions in mind.
Whether you’re about to attend your first auto auction this Winter, or you’re just unsure of what to expect, you can use these predictions to help you finish the year off strong.
When Winter is over, the market will continue to shift. If you want to prepare even further ahead, here's what to expect for auto auctions in 2024.
