Rental Risk Prices Decline Again in May

Price changes for selective market classes for May 2016 versus May 2015. Courtesy of Manheim.
Price changes for selective market classes for May 2016 versus May 2015. Courtesy of Manheim.

Wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased in May, resulting in a Manheim Index reading of 124.5.

The large monthly rise, combined with weakness this time last year, resulted in a year-over-year gain — the first since December of last year, according to Manheim.

Consecutive increases in the Manheim Index for April and May do not suggest a reversal in the expected downward trend in pricing as a result of higher wholesale supplies. They do suggest, however, that dealers have continued to achieve efficiency gains that are allowing them to bid up auction prices even as gross margins narrow, says Manheim.

Auction prices for rental risk units — adjusted for market class shifts and mileage — declined again in May, but the year-over-year decline was substantially less than in either April or March, according to Manheim.

A straight average of rental risk units sold at auction had an increase in pricing for both the month and year-over-year, says Manheim. The difference between the two series was driven primarily by the reduction in average mileage, which, in May, fell to its lowest level since September 2014.

In May, the mileage and seasonally adjusted measure of compact car prices jumped up more than 2%. However, the compact car remains the weakest segment year-over-year — and it, too, had a sizable number of off-lease units coming back, according to Manheim.

May Used Vehicle Index, courtesy of Manheim
May Used Vehicle Index, courtesy of Manheim

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