Unprecedented No-Sales at Chrysler Auction. What This Means for Values
It was just reported to me that at a Chrysler factory sale in Cincinnati, Ohio yesterday, the conversion rate fell into an unprecedented mid-30%. Conversion means the percent of vehicles offered for sale that actually sold. In previous weeks, the conversion rate at similar Chrysler sales had been running in the high 80% range.
This unprecedented low conversion rate signals grave concern and uncertainty for the resale value of these vehicles. It was further reported that in some cases there were absolutely no buyers whatsoever in these lanes. Ironically, on the occasion where there were buyers, there were some cases where bids were within a few hundred dollars of the floor price and yet the Chrysler rep did not budge. This paradox is a result of Chrysler’s failure to anticipate the market’s reaction to bankruptcy and to allow their auction reps discretion to properly respond.
Now, consider the extraordinary high prices that dealers have been paying in recent weeks for late model Chryslers at the auctions. If these vehicles are on dealer’s lots today, they may be worth thousands less than they were just a couple weeks ago. Based on this experience, one could anticipate a similar consequence for late model General Motors’ vehicles as termination letters are being delivered to dealerships today.
While I am less inclined to predict dire consequences for these vehicles in light of my past track record, I’ll leave it up to the industry to make its own judgments and forecasts in light of these facts.