Market Update: April 4, 2008

While the same basic economic conditions still prevail(see: “The Spring Market: a Perfect Storm?” below)and continue to affect the used vehicle resale market, there seems to have been some stabilization in those market segments hardest hit by the supply/demand imbalance over the past couple of weeks. It also appears that those market segments that were performing reasonably well previously may have gained some additional strength during the same time period. To some degree the market conditions are self-correcting. The supply diminishes as people refrain from trading in vehicles - or dealers refrain from selling vehicles - for the meager dollars they are being offered and the demand for such vehicles increases as their transaction prices become lower. So the decline in the hard hit European and Japanese luxury vehicle segment has slowed (we are not yet ready to say it has stopped or turned around), and the same is true for the weakened full size SUV and pick-up markets. At the same time the more economical and efficient smaller vehicle segment and the harder to find lower price range vehicles have gained in strength and may have increased in value in some instances. Both of these positive trends – a slowing of the decline in the weakest segments and a strengthening in the previously stable segments - will be reflected in the upcoming books where appropriate. We still recommend caution, however, in being overly optimistic in either case and in assuming that these recent trends are the norm for the duration of this unusual market.