Growth in Supply Puts Pressure on Used Car Prices

Between March and June, an average of auction prices for rental risk units declined 14.2%, according to Manheim. After adjusting for shifts in market class and mileage, the decline was a more modest 6.5%, but still significant.

Much of the weakness was the result of older and rougher-condition vehicles being sold. For example, in the second quarter of 2014, 62% of the rental risk units sold were from one model year past and 23% were from two model years past, according to Manheim.

But in the second quarter of 2015, only 31% of sales were from one model year past and 55% were from two model years past.

Likewise, in the second quarter of 2014, 45% of the risk units sold at auction had a condition grade of 4.0 or better. In the second quarter of 2015, only 30% did.

Manheim Used Vehicle Changes for Selective Market Classes (June 2015 vs. June 2014)

Chart courtesy of Manheim.
Chart courtesy of Manheim.

Wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) inched up in June after declining in each of the previous four months. This brought the Manheim Used Vehicle Value Index to a reading of 123.9 in June, which represented a decline of 0.1% from a year ago.

Pickups and vans were the only two major segments with higher prices year-over-year, according to Manheim. Within the van segment, full-size commercial passenger units and cargo vans were especially strong.

Within the pricing tiers — as has been the case all year — there was weakness in the $9,000 to $11,000 range and strength in everything above $15,000. The volume of vehicles offered in the $9,000 to $11,000 range was up considerably from a year ago, says Manheim.

ADESA’s Monthly Used Vehicle Prices Analysis

Average wholesale prices for used vehicles remarketed by manufacturers were up 0.3% month-over-month but down 6.9% year-over-year, as off-rental program vehicles continue to be in abundance, according to the latest Kontos Kommentary from ADESA Chief Economist Tom Kontos. 

Prices for fleet/lease consignors were down 2.6% sequentially and down 1.5% annually, according to ADESA. Rental risk vehicles were partly to blame, as a large number of older high-mileage units were de-fleeted. 

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in June averaged $10,192 — down 2.5% compared to May but up 2.4% relative to June 2014.

Wholesale Used Vehicle Price Trends

  Average Prices ($/Unit)     Latest Month Versus:  
  Jun-15 May-15 Jun-14 Prior Month Prior Year
Total All Vehicles $10,192 $10,454 $9,958 -2.5% 2.4%
Total Cars $8,878 $9,085 $8,901 -2.3% -0.3%
Compact Car $6,883 $7,220 $6,861 -4.7% 0.3%
Midsize Car $7,795 $8,029 $8,116 -2.9% -3.9%
Fullsize Car $7,209 $7,202 $7,114 0.1% 1.3%
Luxury Car $12,997 $12,919 $12,397 0.6% 4.8%
Sporty Car $13,578 $13,872 $12,931 -2.1% 5.0%
Total Trucks $11,490 $11,807 $10,502 -2.7% 9.4%
Mini Van $7,363 $7,645 $6,761 -3.7% 8.9%
Fullsize Van $12,844 $12,630 $11,206 1.7% 14.6%
Mini SUV $13,591 $14,264 $12,626 -4.7% 7.6%
Midsize SUV $8,041 $8,584 $7,456 -6.3% 7.8%
Fullsize SUV $11,421 $12,018 $10,542 -5.0% 8.3%
Luxury SUV $19,803 $19,795 $19,478 0.0% 1.7%
Compact Pickup $8,126 $8,101 $7,539 0.3% 7.8%
Fullsize Pickup $14,373 $14,596 $13,116 -1.5% 9.6%
Total Crossovers $11,991 $12,336 $12,323 -2.8% -2.7%
Compact CUV $10,626 $10,829 $11,293 -1.9% -5.9%
Mid/Fullsize CUV $13,014 $13,456 $13,408 -3.3% -2.9%

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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