January Used Vehicle Prices Up Year-Over-Year, Month-to-Month

Average wholesale used vehicle prices rose significantly in January on both a month-over-month and year-over-year basis, according to the latest Kontos Kommentary from ADESA Chief Economist Tom Kontos. 

According to Kontos, it‘s important to disaggregate averages and indexes in order to look at the underlying impact the supply of off-rental and off-lease vehicles is having on current-to-one-year-old models and three-year-old models, respectively.

A somewhat different picture emerges here in that prices for these age segments did indeed take a hit in January, says Kontos. Auction “factory” sales were resumed for large inventories of off-rental program units that had been curtailed at year-end 2014, and growing numbers of vehicles leased approximately three years ago continue to reach maturity and enter online and in-lane remarketing channels.

Strong retail demand, especially for CPO units, as well as moderate incentives, have partially offset these impacts for these age segments and the used vehicle market as a whole, says Kontos.

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in January averaged $10,220 — up 3.6% compared to December and up 2.4% relative to January 2014.

Much of the month-over-month and year-over-year price variance by model class segment is driven by higher off-rental program vehicle sales this January compared to December and January 2014, according to ADESA. Program vehicles are typically current-model-year or one-year-old models that sell for higher average prices than other auction sales types.

Thus, not a lot should be read into the double-digit increases in average prices seen in some model class segments. However, even after stripping off the impact of higher program vehicle sales, prices for Midsize SUVs and Fullsize Pickups still showed strength, according to ADESA.

Prices for used vehicles remarketed by manufacturers were down 10.8% month-over-month and down 11.5% year-over-year, according to ADESA. As anticipated in this report last month, the tailwind to prices that might have been provided by the absence of program units (due to sale curtailments in December), turned into a headwind as these units are being released in early 2015.

Prices for fleet/lease consignors were up 5.2% sequentially and up 1.3% annually, according to ADESA. This indicates healthy demand for older repo and commercial fleet vehicles, even as off-rental risk and off-lease prices face downward pressure from higher supply.

Wholesale Used Vehicle Price Trends     
  Average Prices ($/Unit)     Latest Month Versus:  
  Jan-15 Dec-14 Jan-14 Prior Month Prior Year
           
Total All Vehicles $10,220 $9,864 $9,983 3.6% 2.4%
Total Cars $9,134 $8,620 $8,869 6.0% 3.0%
Compact Car $7,377 $6,654 $7,010 10.9% 5.2%
Midsize Car $8,004 $7,712 $8,258 3.8% -3.1%
Fullsize Car $8,546 $6,075 $6,771 40.7% 26.2%
Luxury Car $12,593 $12,466 $12,209 1.0% 3.1%
Sporty Car $13,050 $12,950 $12,343 0.8% 5.7%
Total Trucks $11,015 $10,851 $10,438 1.5% 5.5%
Mini Van $7,663 $7,658 $7,448 0.1% 2.9%
Fullsize Van $11,331 $10,198 $10,341 11.1% 9.6%
Mini SUV $13,002 $12,748 $11,987 2.0% 8.5%
Midsize SUV $8,246 $7,763 $7,503 6.2% 9.9%
Fullsize SUV $10,893 $11,569 $10,981 -5.8% -0.8%
Luxury SUV $18,243 $19,109 $18,941 -4.5% -3.7%
Compact Pickup $7,559 $7,441 $7,362 1.6% 2.7%
Fullsize Pickup $13,550 $13,027 $12,632 4.0% 7.3%
Total Crossovers $12,233 $11,931 $12,768 2.5% -4.2%
Compact CUV $10,965 $10,565 $11,553 3.8% -5.1%
Mid/Fullsize CUV $13,157 $12,875 $13,999 2.2% -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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