ADESA: Used-Car Prices Stay High

Used-vehicle prices have continued their year-over-year increases because of tight supply and solid demand, wrote ADESA’s Tom Kontos in his February 2009 Kontos Kommentary column.

Only severe weather in late January and early February briefly interrupted this increase, Kontos wrote.

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used-vehicle prices in February averaged $10,138 — a 3 percent increase from November and an 8.3 percent increase from prior year. This is the first time since July that average prices have topped $10,000.

Prices for all car and truck categories except full-size cars were up for the month, and all categories were up versus prior year. Full-size cars are a relatively small-volume segment at auction and small changes in factors such as seller type and vehicle condition month-to-month can have disproportional impacts on average prices. Demand for passenger vans for spring break may be driving higher prices for full-size vans, although weak comps last year are also behind the strong year-over-year price change for this segment.

By seller type, manufacturers registered a 0.5 percent month-over-month price decrease and a 14.8 percent year-over-year rise; fleet/lease consignors experienced a 5.6 percent sequential price decrease and a 13.2 percent annual increase. Dealers saw a 3 percent average price increase versus January and a 14.2 percent uptick versus February 2009.

ADESA Analytical Services estimates that auction industry inventory levels stood at 33 days at month-end compared to 50 days last February — an indication of tight supply.

In addition, Kontos wrote that the impact of Toyota’s recall crisis on its wholesale vehicle values at auctions is inconclusive. He said analysts of the used-vehicle market will have difficulty isolating the impact a single factor, such as a vehicle recall, on wholesale vehicle values.

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