Wholesale experts discuss the increasing price of used bikes at wholesale
Officials like to a point to a 2007 Honda VTX1300R as indication of just how much the values in the used bike price market have fluctuated over the past year.
It’s not uncommon for a metric cruiser like that to depreciate $700-$800 in value over the course of a year. So the Black Book value of the VTX1300R might have been close to $5,000 last year, meaning it should now be close to $4,300.
But the reality in what has been a perfect storm for used bike prices means that same bike — a year older — was valued at $5,300 in March and is likely to be set even higher in April, according to officials at Black Book’s Motorcycle & Powersports Value Guide.
“The perfect storm has occurred from a preowned perspective,” Justyn Amstutz, vice president of sales and marketing at National Powersport Auctions (NPA), said in relation to the escalating cost of used motorcycles.
The drivers behind that perfect storm are well known now: Fewer new units being brought into North America, more consumer interest in the often lower-priced used units and the sudden increased availability of such units because of an abnormally high level of consumer and dealer repossessions.
As a result, prices over the past few months at the wholesale level did not follow historical trends. Instead of used bike pricing taking its accustomed dip in the winter months, selling prices at auction remained on level with values usually not seen until the spring or summer time.
“Over the winter the prices didn’t go down as much as they did in the past,” Ricky Beggs, vice president of Black Book, said of the industry’s wholesale activity. “When the spring market did come back, they climbed up even higher than they had in the past.”
But what’s to follow in the coming months? Could the 2007 Honda VTX1300R that is actually valued higher today than a year ago keep escalating in price? Experts familiar with the wholesale market don’t think so.
“I think we’ve reached a ceiling,” Amstutz said. “I don’t think prices will get much higher, but I believe they are consistently going to stay at this level.”
One reason why prices remain at historically high levels is the availability of used motorcycles. While there is still an ample supply at wholesale, the amount of repossessions has decreased, auction officials say.
“Repossessions by the major lenders are decreasing,” said Karen Braddy, general manager of Manheim Specialty and Heavy Truck & Equipment. “The tightened lending standards the lenders put in place back in mid-2009 means less repossessions right now.”
Braddy, however, notes she doesn’t expect this to be a trend.
“We have seen the lending standards relaxed in the last six months or so, which means we should see repossessions climb again in 2012,” she said.
Amstutz of NPA also has seen a decrease in repossessions, but notes “our volume is still substantial enough where a dealer can come and purchase what he’s looking for. That’s the benefit of having thousands of units on a monthly basis across four locations.”
Both auction providers noted increased dealer involvement in the wholesale arena is having a positive industry impact — more dealer consignment bikes are coming to market.
“As we continue to educate dealers about the advantages of using auctions, more and more are taking advantage of the ability to quickly move aged inventory and trade-ins to make room for the new product that is coming back into the pipeline,” Braddy said.
Amstutz noted the faster dealers can get more ingrained into their communities’ preowned markets, the quicker prices at wholesale will return closer to historical levels.
“The more educated dealers become about being able to buy off the street and take trade-ins aggressively,” he said, “the faster the preowned unit prices will come down.” PSB
Copyright 2011 Powersports Business