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March Wholesale Pricing In Review

NPAIf the spring season so far is any indication, then 2016 is going to be a good year for powersports. The wholesale market in March was dominated by two clear trends: 1. Stronger wholesale pricing over the prior three months, and 2. Softer wholesale pricing compared to March the prior year, which is due to slightly older model age. Street motorcycles were particularly strong as key regions of the country have been enjoying milder weather. Off-Road, MX bikes were stable, while ATV and Side-by-Side pricing softened a bit. Buyer appetite was strong in March and sellers were much more realistic in their price expectations, enabling buyers to more easily get what they wanted and allowing auction momentum to do its job. Pre-owned vehicles are in demand right now.

The wholesale price/book ratio in March increased for most categories when comparing auction prices to NADA Clean Wholesale values. This is partially due to solid auction prices as well as the most recent book update, in which most values remained relatively flat.

So with all the positive market indicators, why are average auction prices running less than last year’s levels? Product mix is the answer. As we have seen in prior months, the average model age of wholesale vehicles has gotten older. There is still a great mix of newer, late model inventory and it is mixed in with units that are six months older on average than last year. The resulting average unit is clean and brings the same price/book ratio, but its price is understandably lower since the average unit is slightly older.

Many dealers shared with us this month that February was one of their best in recent memory, including dealers that had exceptionally soft January sales. We think that spring pricing will stay elevated as the retail season cycles. We recommend that sellers stay conservative in their value expectations, as our month-end H-D auction reminds us, buyers that need inventory will reward sellers when efficient auction timing and momentum is unhindered by unrealistic seller expectations. With auction volumes increasing both live and online, there is plenty of inventory selection for buyers to choose from.

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