A Market in Flux

Do you know what your used car is worth? Should you care? If you run a vehicle donation program it’s “must have” information.

Here’s why. After an unprecedented 30 percent rise in prices between 2009 and 2011, car prices for donated vehicles have since fallen by nearly 8 percent and it is possible that they will decline further in the months ahead, by at least a few percent or more.

Sometimes a picture is worth a thousand gently-used Daewoo Leganzas.This one says it all in terms of used-vehicle price trends.

Used car sale prices over the last 15 years have been anything but steady!

As you set your expectations for vehicle donation income during the coming year, your station should plan accordingly. If you’re managing a vehicle donation program, make sure you’re doing everything you can to promote it as well as possible, via all your channels—on-air, web, print and in-person at station events. Our 30,000-Mile Checkup is a great start towards seeing if you’re doing everything you can do. Car Talk partners should be running our latest promos featuring a variety of NPR hosts, along with supporting web tiles and other assets. For information, contact Twyla Olson, Business Development Director at Car Talk Vehicle Donation Services.

What’s behind the change in pricing? Joe Hearn, Director of Vehicle Sales at Car Talk Vehicle Donation Services, shared his observations. After we talked we came up with a few thoughts about how stations can best position themselves during this trend.

Joe (front, left) and his colleagues at Advanced Remarketing Services focus on getting value for the charities they work with.

Joe Hearn, left, with his crew who work to make sure stations get top dollar for their donated vehicles.

I see four causes for this right now as I look at the vehicle sales landscape. First, a resurgence in the new car segment. With a stronger economy and favorable financing, buyers are moving from eyeing a used car, to looking at a new car. Within the used-car market, light trucks and SUVs are declining the least. The oldest vehicles in the used-car marketplace, those 10 years old or older, are declining the most. This is a case of, “When the top succeeds, the bottom weakens.”

Second, a weakening steel market in Asia. On average, 24 percent of donated vehicles are “end of life,” high-polluting cars that are recycled. Automobiles are the most heavily recycled consumer products on the market, and the single most valuable item in a recycled car is the steel, which accounts for about 60 percent of the sale price. Turkey and China are the two biggest consumers of U.S. scrap steel. China uses it for its own purposes and Turkey exports steel to much of the world. Demand is down 30 percent this year. Obviously, that has a dramatic impact on pricing for “end-of-life” vehicles.

Even Tommy wouldn't drive these old clunkers! About a quarter of donated vehicles end up being recycled. (Image by Proggie, Flickr)

Third, foreign buyers are buying fewer cars. Not many people realize this, but there’s a world market for older vehicles that are being sold in the United States. For example, it wouldn’t be surprising to see a 1994 Toyota Camry with a “UCLA” sticker on the back driving around Senegal.

In recent years, as many as 25 percent of our used cars have been sold to buyers in Central and South America, and in West Africa. Wholesale purchasers are buying these cars and reselling them to buyers in developing countries. It’s just as likely that we’ll sell a car to a buyer in West Africa as Des Moines. Shipping costs have been very favorable, since many of the container ships leaving U.S. ports have space available. Plus, currency exchange rates have been also been very positive, further helping this corner of the business. With other economies not recovering as well as ours, that’s impacted exchange rates.

Don't drive like mi hermano! These days many used cars from the U.S. wind up in places like Mexico. (Image by CarlosVanVegas, flickr)

Finally, consumers have more choices than ever for getting rid of their less desirable cars. In addition to many competing vehicle donation opportunities, there are now direct-to-consumer “cash for cars” programs that are a source of increasing competition.

Unfortunately, I don’t see any significant changes to these trends for the foreseeable future. This is the trend we’re seeing now.

So... what’s a station to do? Car Talk Vehicle Donation Services' Business Development Director Twyla Olson will be working with our partners to help counteract the effects of this trend. Drop her a line!

Twyla Olson stands ready to help.

Twyla taking a rare break from talking with her many friends in public radio and TV.

As public media veterans at CTVDS, we’ve seen our share of ups and downs in our industry’s revenue streams. Developing a solid promotional strategy now can make a huge difference for your station at year’s close. End-of-year giving and Fall fund drives are two key opportunities in the months ahead.

Along with Cari Ness-Nesje, Director of Station Support, Twyla will be in touch with all Car Talk VDS clients to arrange marketing consultations and to discuss new trends and strategies. This year, more than ever, we recommend taking a proactive approach to your vehicle donation strategy.  

Car Talk Vehicle Donation Services will revisit this trend in sale prices in the Fall, and keep you posted right here, as well as via our Facebook page. As always, and regardless of the macro-economic trends in the world, we’re doing everything we can to maximize revenue for each and every vehicle that comes in to our partners.