Wholesale used vehicle prices softened modestly in August compared to the previous month and the record highs recorded in April. But this seasonal softening and the tight supplies continue to exert pressure on used-vehicle values and keep them at historically high levels, according to Tom Kontos in ADESA Analytical Service's August Current Used Vehicle Market Conditions and Outlook.

Nevertheless, consumers and dealers may be "pushing back" on what they view as high used-vehicle prices, respectively, at retail and wholesale.

New-vehicle sales may be benefiting from high used-vehicle prices, both from substitution as new-vehicle prices become more attractive relative to higher used-vehicle prices, and from higher trade-in values for new vehicle shoppers.

The lower used-vehicle retail sales in August may in part be a result of the substitution of new-vehicle purchases by shoppers who might have otherwise bought a used vehicle. Lower used-vehicle sales may in turn have allowed dealers to be more selective in the lanes and online.

To the extent high used-vehicle prices are supporting improved new vehicle sales, this is a welcome trend for the auto industry as a whole. For remarketers, however, substitution of new vehicles for used vehicles by consumers at retail and the ability of dealers to be more selective at wholesale are demand-side reminders that prices may continue to soften even as tight supplies provide some underlying support to wholesale prices.

According to ADESA Analytical Services' monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in August averaged $9,993 - down 0.7 percent from July and up 0.4 percent versus prior year. Other than for some of the lower-volume model class segments whose prices tend to be more volatile, average prices for each of the segments tracked at or near the market average on a month-over-month basis. An exception would be mid-size cars - a popular vehicle at auction, especially among commercial fleet consignors - which managed a modest price increase for the month.

Manufacturers registered a 2.2 percent month-over-month price increase and a 7.4 percent year-over-year rise, indicating still-strong demand for off-rental program units. Fleet/lease consignors experienced a 0.7 percent sequential price increase and a 1.8 percent annual increase, in part from strong dealer demand for rental risk and commercial fleet units. Dealer consignors saw a 1.3 percent average price decrease versus July and a 9.4 percent uptick versus August 2009.

ADESA estimates that auction industry inventory levels stood at 28 days at month-end compared to 33 days last August - continuing to indicate tight supply and high auction throughput.