Kontos: 'Modest Softening' in Wholesale Prices

Following is the October 2011 'Kontos Kommentary' on current used-vehicle market conditions presented by Adesa's chief economist Tom Kontos.

Summary
Wholesale prices appeared to do an about-face as they ceased their sequential and year-over-year decline seen since peaking in April. However, a deeper dive quickly reveals that prices continued to soften in all three of the traditional auction industry seller segments: factory, fleet/lease and dealer consignment.

With Fall defleeting in full swing, off-rental units sold by manufacturers and rental companies in the factory and fleet/lease lanes and online made up a higher percentage of total auction volumes in October. These vehicles tend to be late-model, higher-dollar units and therefore contributed positively to average prices for the month. Had the same proportion of vehicles been sold by each of the seller groups in September and October, average prices would have fallen by 2% on both a sequential and annual basis.

Based on this analysis, we would conclude that wholesale prices continued the modest softening pattern described in our previous commentaries.

Details
According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in October averaged $9,842 – up 0.9% compared to September and 0.8% versus October 2010. Car prices continued to correct downward and truck prices upward as they reset from high gas prices earlier this year.

SOURCE: ADESA Analytical Services
SOURCE: ADESA Analytical Services

Manufacturers registered a 3.1% month-over-month price decrease and a 5.1% year-over-year rise. Fleet/lease consignors experienced a 3.1% sequential price decrease and a 0.4% annual decrease. Dealer consignors saw a 1.0% average price decrease versus September and a 3.2% uptick versus October 2010.

ADESA Analytical Services estimates that auction industry inventory levels stood at 30 days at month-end marking the second month in a row that days-supply of auction inventories matched year-ago levels; auction industry inventories had been below year-ago levels from July 2009 through August 2011, by our estimates. The rise in inventory levels is primarily a reflection of higher Fall defleeting.

Based on data from CNW Marketing/Research, retail used vehicle sales in October were up 13.0% year-over-year for franchised dealers and 11.7% for independent dealers. On a month-over-month basis, used vehicle sales were down about 16% for both groups. Certified used vehicle sales in October were down 1.4% versus September and versus prior year according to Autodata.

Comment On This Story

Name:  
Email:  
Comment: (Max. 10000 characters)  
Please leave blank:
* Please note that every comment is moderated.

Newsletter: Sign up to receive latest news, articles, and much more.

Read the latest

Auto Focus Blog: A blog covering fleets, auto rental and the business of cars

Autonomous Vehicles and the Changing Role of the Fleet Manager

With fewer drivers and substantially longer fleet lifecycles, fleet managers will pivot to new job functions.

2017: Fleet Mix Will Be Paramount

Car rental companies are migrating to vehicle segments with better residual values, though not without bumps in the road.

Auto Rental Summit: Five Trend Lines

Taking in the seminars, discussions, and networking at the 2016 Auto Rental Summit, trend lines emerged around shifts in model mix, data protection issues, increasing labor costs, workforce engagement, and new platforms to rent cars.

Job Finder: Access Top Talent. Fill Key Positions.