December Used Vehicle Prices Up Year-Over-Year

December wholesale used vehicle prices fell modestly in December but remained up on a year-over-year basis, according to the latest Kontos Kommentary from ADESA Chief Economist Tom Kontos.

These results reflect the ongoing growth and change in the composition of wholesale supply toward greater “institutional” volume (off-lease, off-rental, off-fleet, repos, etc.) versus dealer consignment volume. This yields a “richer mix” that elevates average prices, even as supply growth applies downward pressure to those prices, says Kontos.

This is not the only factor that has supported used vehicle prices in a year of supply growth: as new vehicle incentives have been relatively benign; used vehicle retail sales (especially of certified vehicles) have been strong; supply curtailments and disruptions due to weather and recalls occurred throughout the year; and redistribution of volume into multiple remarketing channels. All of these factors have diffused the impact that supply normally has on wholesale values, says Kontos.

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in December averaged $9,844 — down 0.3% compared to November and up 2.0% relative to December 2013.

Luxury and sporty cars experienced healthy average price increases, perhaps as dealers looked to stock these cars on their lots for the holidays, according to ADESA.

Prices for used vehicles remarketed by manufacturers were up 9.6% month-over-month but down 2.8% year-over-year, according to ADESA. Sale curtailments — due to recalls — were a factor in these December results, and “factory” inventories were relatively high entering 2015. Thus, the tailwind to prices, which could have been provided by the absence of units due to these sale curtailments, could turn into a headwind as these units are released in early 2015.

Prices for fleet/lease consignors were up 1.3% sequentially but down 0.3% annually, according to ADESA. Within this segment, prices for off-rental “risk” units held up well, rewarding rental companies that capitalized on the absence of factory units mentioned in the previous paragraph.

For dealer consignors, there was a 1.7% increase versus November and a 3% increase relative to December 2013, indicating the wholesale market is readily absorbing excess dealer trades generated from strong new vehicle sales.

Based on data from CNW Marketing/Research, retail used vehicle sales in December were down 0.3% month-over-month and 4.1% year-over-year.

Despite these December declines, 2014 retail used vehicle sales reached 29.6 million units — very close to last year’s total. Moreover, the composition of those sales included a higher percentage of higher priced, and typically higher grossing, certified pre-owned (CPO) vehicles, which totaled 2.3 million units in 2014 versus 2.1 million the prior year.

And based on figures from Autodata, sales of certified pre-owned (CPO) vehicles increased 3.9% month-over-month and 17.2% year-over-year.

Wholesale Used Vehicle Price Trends     
  Average Prices ($/Unit)     Latest Month Versus:  
  Dec-14 Nov-14 Dec-13 Prior Month Prior Year
Total All Vehicles $9,844 $9,870 $9,654 -0.3% 2.0%
Total Cars $8,615 $8,612 $8,499 0.0% 1.4%
Compact Car $6,651 $6,787 $6,530 -2.0% 1.9%
Midsize Car $7,700 $7,672 $7,782 0.4% -1.1%
Fullsize Car $6,060 $7,617 $6,308 -20.4% -3.9%
Luxury Car $12,455 $12,181 $12,104 2.3% 2.9%
Sporty Car $12,955 $12,565 $12,076 3.1% 7.3%
Total Trucks $10,809 $10,856 $10,116 -0.4% 6.8%
Mini Van $7,644 $8,147 $7,451 -6.2% 2.6%
Fullsize Van $10,197 $10,680 $9,402 -4.5% 8.4%
Mini SUV $12,734 $12,491 $11,329 1.9% 12.4%
Midsize SUV $7,724 $7,841 $6,803 -1.5% 13.5%
Fullsize SUV $11,533 $11,689 $11,178 -1.3% 3.2%
Luxury SUV $19,061 $18,929 $19,419 0.7% -1.8%
Compact Pickup $7,420 $7,393 $7,039 0.4% 5.4%
Fullsize Pickup $12,960 $12,911 $12,054 0.4% 7.5%
Total Crossovers $11,921 $11,974 $12,457 -0.4% -4.3%
Compact CUV $10,417 $10,866 $11,069 -4.1% -5.9%
Mid/Fullsize CUV $12,988 $13,082 $13,811 -0.7% -6.0%

This Kontos Kommentary analysis is based on nearly six million annual sales transactions from more than 150 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. ADESA Analytical Services segregates these transactions to study trends by vehicle model class.

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