Adesa: Retail Used Car Sales, Low Auction Supply Helping to Firm Wholesale Prices

Wholesale prices should continue to show “stable-to-firming” trends in the near future, according to ADESA’s Tom Kontos. Thanks to gains in retail used-car sales and relatively low auction supply, last month’s wholesale prices were up slightly from October, he reported.

Kontos, reporting in his November 2009 Kontos Kommentary column, stated that November’s average wholesale price of $9,519 marked a 9.3-percent year-over-year gain and a 0.6-percent upswing from the previous month. Wholesale used vehicle average prices were up modestly in November vs. October, partially triggered by an improvement in retail used-vehicle sales and relatively tight supplies.

He remarked that the 2.3 percent rise in the used vehicle consumer price index <!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} --> the first year-over-year jump in the index in 16 months <!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} --> could mean that retail used-vehicle demand is strong enough for dealers to pass along the cost of higher priced auction purchases.

Kontos went on to note that average prices for trucks were up 15.7 percent from November 2008, while car prices climbed 3.7 percent from a year ago. Prices in manufacturer sales climbed 27.4 percent from the prior year, despite falling 3.1 percent from October.

Fleet/lease prices were up 14.6 percent year-over-year but declined 1.5 percent from the previous month.

Inventory levels were at 37 days at the end of November, compared with 35 days at the end of October, according to ADESA Analytical Services estimates.

Retail used-car sales increased 34.2 percent from the prior month, compared to a 41-percent decline in October, Kontos pointed out, citing CNW Research data.

He also pointed out that the economy seems healthier, with rises in personal income that are allowing consumers to increase expenditures on big-ticket items like new and used vehicles.

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