Galves Auto Price List’s 2008 Used Car Values Year in Review

Weak Economy Forces Dealers & Consumers to Struggle With Dwindling Trade-In Values

As 2008 draws to a close, it can be said that this has been a most unusual year for the automotive industry. That is, of course, an understatement. This has been an unprecedented year, and certainly the most challenging year we’ve experienced since we first began publishing our trade-in values in 1957.

A perfect storm of events – a doubling of fuel prices for much of the year, a faltering economy accompanied by a 40% decline in the stock markets, the demise of several major financial institutions and a government bailout of several others, a housing crisis threatening the stability of many families and their financial foundation, record level increases in unemployment, a dramatically changing political climate, to name a few – has conspired to undermine our overall economic stability.

While the automobile industry has not been suffering alone, it has certainly been hard hit and is likely to experience long term issues as we fight our way through this very difficult business cycle.

Subjectively speaking, this has been a year without rest. As those of us who have been active in the industry for any length of time know, there are usually periods of the year when the used vehicle markets are extremely stable and experience little fluctuation.

Historically those stable periods offer those of us in the guidebook business time to focus on some of the fringe components of the business while still safely watching our critical pricing responsibility. Not so this year.

First the spike in fuel prices created significant movement among both the fuel-sippers and the fuel-guzzlers. Each market segment (and those in-between) demanded careful attention as consumers responded to the abrupt economic impact of fuel costs on their budgets and their response eventually filtered down to dealers’ buying/trading decisions.

Then the already supply-burdened luxury car and truck segment that demanded close watching and adjusting all year was further deflated by the economic crisis that brought demand almost to a halt. Ultimately that lack of demand reached down to all segments of the market and has brought us to where we are today.

Plenty of objective evidence exists to illustrate the unprecedented market we have experienced this year as well.

In general, the luxury car and truck segment of the market has experienced a 15-30% decline from last year’s less than stellar market.

This has been a year of unprecedented erosion in used vehicle values as the following examples, based on Galves trade-in values below illustrate.

We believe that 2009 will continue to see steady declines, but not at the rate we saw this year. Much of the adjustment has already been made in the values and while we believe demand will continue to be diminished, so will supply. Eventually people need to replace vehicles and used vehicles should be in relatively high demand compared to new vehicles given their dramatically eroded values and consumers’ shrunken budgets.

Luxury Cars & SUV's	December 2007	December 2008	Difference	Decrease
Two-year old Mercedes E350	$25,800	$18,200	$7,600	29%
Four-year old Mercedes Benz S430	$27,500	$20,500	$7,000	25%
Three-year old Porsche Cayenne S	$32,800	$27,700	$5,100	16%
Three-year old BMW 750Li	$38,500	$33,000	$5,500	14%
Two-year old Lexus RX350	$29,000	$25,200	$3,800	13%

Mid-Level Cars & SUV's	December 2007	December 2008	Difference	Decrease
Two-year old Ford Fusion SE V6 Sedan	$10,900	$8,650	$2,250	21%
Two-year old Jeep Grand Cherokee Laredo	$13,200	$10,700	$2,500	19%
Two-year old Ford Explorer Eddie Bauer	$16,100	$13,150	$2,950	18%
Three-year old Toyota Avalon XLS	$18,300	$15,600	$2,700	15%
Three-year old Honda Accord EX	$12,900	$11,700	$1,200	9%