Manheim: Risk Units Stay above $14,000

Despite fears of a second economic downturn — in which Manheim Consulting called this year’s back-to-school shopping season “a disappointment” — the auction house also reported in its Auto Industry Brief for August that new and used retails sales continue to rise. And while the monthly value of wholesale vehicles declines, the average price of a rental risk unit sold at auction remains at more than $14,000 for the fifth month in a row.

Rental risk vehicle value is lower in the August report compared to March, when average prices hit above $14,500. Volume sold of these vehicles decreased in July, though this is a slower decline than what occurred in the first half of the year, according to Manheim Consulting. The monthly report also states that average mileage of risk units lessened in July but still lingers above last year’s average.

While the Manheim Index moved down in July and early August because of the 1.3 percent decrease in wholesale used vehicle prices, the 2011 averages are well-above historical levels, reaching its highest peak yet last May. Wholesale prices are expected to continue to lower.

End-of-service commercial fleet unit values hit a record high in June but have since declined, as well as volume sold. “A review of monthly pricing and volumes sold in 2011 suggests that fleet managers were spot-on in remarketing their largest volumes when prices were the highest,” the report states.

New vehicles sales have slowed in pace at 12.2 million in July compared to the first four months of the year, when 13.1 million was the monthly average. “Low inventories and fewer incentives continue to play a role in moderating new vehicle sales, but consumer wariness is also a factor,” the report states.

Used vehicle sales, on the other hand, saw a huge jump, according to CNW Marketing Research, which cited a 13.5 percent increase in year-over-year sales in July. The firm estimates in the report that sales in August will rise by 3 percent.

Gas prices are also higher now than a year ago, where crude oil prices have declined by 15 to 30 percent, while pump prices have fell by only 10 percent. Manheim Consulting expects these prices to continue to decline. 

Overall, Manheim expects used and new car sales to stay strong even amid the political and economic backlash from the summer’s debit ceiling talks, the S&P downgrade, changes to the bond market’s investment returns and the mounting European debts.

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