May is usually the tail end of the spring wholesale market, and this year is no exception. Average Wholesale Prices (AWP) in May were strong and stable, coming in flat to slightly up over the prior three-month average. At the same time, they also declined slightly from April to May for all major product categories except sport bikes, suggesting the market is at the end of its spring peak.
Compared to the prior three-month average, sport bikes saw the biggest gain with both a 7% increase as well as a 1.5% increase over the prior May in 2015. Domestic and metric cruisers were roughly flat over the prior three months and below May 2015 as model ages creep upward.
Off-road categories were generally stronger than both the three-month and prior year numbers, consistent with their continued popularity despite an uptick in wholesale supply due to increasing repo volumes. As we predicted at the beginning of the year, wholesale prices are following a typical seasonal curve in 2016. This trend is particularly clear when comparing AWP to NADA clean wholesale prices for each product category.
The corresponding price/book ratio is trending in almost perfect sync with the five-year average for the major categories, though at a slightly lower level so far than last year. Price/Book values this spring are in the 90% range for clean units; this will shift to 85% for clean wholesale units in the late summer before rising again late in the year. Rougher, higher-mileage units will be markedly less.
As we contemplate the coming summer months, we expect wholesale pricing to follow its normal softening. However, a key factor this year is the role consumer financing has in supporting consumer demand. Default rates are still low and new and existing lenders are becoming more aggressive in powersports. This is particularly helpful to new unit sales, where strong pricing can help support strong pre-owned pricing.
More importantly, used vehicle financing is increasingly more available. We are hopeful this will help the powersports market grow as new and returning riders are more readily able to afford the bike or ATV of their dreams.
All data provided by National Powersport Auctions. For more information, please visit www.npauctions.com or call (888) 292-5339
