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Total loss vehicle values up in 2011

March 7, 2012—Total loss vehicle values in 2011 rose 7.1 percent compared to 2010, according to CCC’s 2012 Crash Course report, which was released Wednesday.

Average total loss values for vehicles seven years and older, vehicles one to three years old, and current model year vehicles all rose to $5,311, $18,000 and $26,000, respectively, according to CCC.

CCC said one factor that impacted total loss costs in 2011 was the volume of storms and catastrophes in the U.S. The high volume of total losses stemming from storm and catastrophe activity drove up comprehensive losses’ share of volume in 2011, which subsequently increased overall total loss costs.

Overall comprehensive total losses among current model year vehicles increased to 10.1 percent during 2011, compared to 9.6 percent in 2010, according to CCC.

CCC said dynamics occurring in the marketplace also impact total loss costs. For example, new vehicle demand and prices impact used vehicle values. The residual values of new vehicles rises as they experience greater demand, CCC said, which ultimately impacts the price those vehicles sell for as used vehicles.

CCC said auto dealers have seen average new vehicle transaction prices, as a percentage of MSRP, grow from 80.6 percent in December 2007 to 84.1 percent in December 2011. Market demand for used vehicles dictates what consumers are willing to pay, and the supply-demand equation dictates how quickly used vehicles sell in the market. The used vehicle supply averaged 45 days in December 2011, a 16 percent reduction compared to December 2010.

“Many of the broader automotive industry indices that look at wholesale or retail used vehicle price data focus predominantly on vehicles that are aged seven years and younger. Total loss vehicle costs, however, are driven by a much different mix of vehicles—70 percent of all total loss vehicles are aged seven years and older. In fact, the share of total loss valuation count for newer model year vehicles has dropped nearly every year since 2000, as vehicles on the road in the U.S. last longer and consumers hold onto them longer,” CCC said. “Additionally, total loss vehicle costs are also impacted by claim frequency patterns such as catastrophes that can lead to a dramatic shift in vehicle mix and subsequently drive up average values. Lastly, newer model year vehicles are much more subject to the influences of market trends for new vehicles, and subsequently experience more volatility in pricing than older model year vehicles where demand is much more constant in nature.”