Wholesale Prices Stay Near Record Levels

Tom Kontos of ADESA presents his monthly analysis of the wholesale used vehicle market for April:

Summary

Average wholesale prices remained at near-record levels in April, as concerns about new vehicle supply disruptions and high gasoline prices continued to add to the existing tight-supply/high-demand dynamic in place in the used vehicle market since mid-2009.  Moreover, new vehicle incentives were down considerably in April, giving used vehicle prices even more upside support.

Dealers may have spent more for the vehicles they bought in the lanes and online at wholesale auto auctions, but strong retail sales and encouraging gross margins reported by the publicly traded auto retail groups indicate that consumers are willing to pay more for desirable used vehicles as well.

April also marked the return of a pattern seen often during the last run-up of gasoline prices to the $4.00 level, namely recording of the strongest price gains for compact cars and the most significant price declines for fullsize SUVs and pickups.

Details

According to ADESA Analytical Services' monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in April averaged $10,551 - flat with March and only 0.6% lower than last April's record level. Prices were strongest for compact cars (up 7.2% month-over-month and 14.4% year-over-year) and weakest for fullsize SUVs (down 2.9% m/m and 7.5% y/y) and fullsize pickups (down 3.1% m/m and 12.2% y/y).

Wholesale Used Vehicle Price Trends

  Average Prices ($/Unit) Latest Month Versus:
  Apr-11 Mar-11 Apr-10 Prior Month Prior Year
           
Total All Vehicles $10,551 $10,550 $10,611 0.0% -0.6%
     
Total Cars $9,974 $9,765 $9,485 2.1% 5.2%
Compact Car $7,741 $7,220 $6,769 7.2% 14.4%
Midsize Car $8,645 $8,318 $7,843 3.9% 10.2%
Fullsize Car $6,685 $6,849 $6,763 -2.4% -1.2%
Luxury Car $14,335 $14,367 $15,093 -0.2% -5.0%
Sporty Car $13,639 $13,282 $12,896 2.7% 5.8%
           
Total Trucks $11,193 $11,422 $11,968 -2.0% -6.5%
Mini Van $8,287 $8,258 $8,358 0.3% -0.9%
Fullsize Van $9,391 $9,246 $9,545 1.6% -1.6%
Mini SUV $11,031 $11,166 $10,842 -1.2% 1.8%
Midsize SUV $10,228 $10,575 $11,062 -3.3% -7.5%
Fullsize SUV $13,293 $13,697 $14,379 -2.9% -7.5%
Luxury SUV $20,178 $20,320 $21,657 -0.7% -6.8%
Compact Pickup $7,453 $7,391 $7,669 0.8% -2.8%
Fullsize Pickup $11,034 $11,389 $12,575 -3.1% -12.2%

Source: ADESA Analytical Services. March data revised.

Manufacturers registered a 1.6% month-over-month price decrease and a 14.9% year-over-year rise.  Fleet/lease consignors experienced a 0.4% sequential price increase and a 1.8% annual increase.  Dealer consignors saw a 5.7% average price increase versus March and a 6.7% uptick versus April 2010.

ADESA Analytical Services estimates that auction industry inventory levels stood at 25 days at month-end compared to 31 days last April, as used vehicle supply remains tight.

Based on data from CNW Marketing/Research, retail used vehicle sales in April were up 10.7% year-over-year for franchised dealers and 17.3% for independent dealers.  On a month-over-month basis, used vehicle sales were up by about 40% for both groups.  Certified used vehicle sales in April were down 4.0% versus March but up 8.0% compared to April 2010, according to Autodata.  Average new vehicle incentives have dropped by about $500 this year according to Edmunds, Inc.

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