Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) rose in July, the second straight monthly increase, even in the face of higher supplies, according to Manheim Consulting.
Driven by profitable used vehicle retail opportunities and low new vehicle inventory levels for certain models, strong dealer demand has played a role in the rise of wholesale prices, says Manheim. Given the ready availability of retail credit, Manheim expects that dealer demand for wholesale units will not ease up anytime soon. However, it is still the general consensus that wholesale values will moderate in the later part of this year.
With prices falling between June and July, the Manheim Used Vehicle Value Index now stands at 120.9, a decline of only 0.2% from its year-ago level.
Although retail used unit sales by dealers fell in July, as they did for the second quarter as a whole, same-store used retail unit volumes increased for the 16th consecutive quarter during Q2, according to Manheim. And the magnitude of the increase (+13.2%) was the largest since the second quarter of 2010.
With new vehicle sales running at an annual rate of 15.9 million and 15.8 million in June and July, respectively, dealers have found themselves short of some models, says Manheim.
In July, unadjusted prices for rental risk units sold at auction increased, whereas the normal seasonal pattern usually brings a decline. Along with demand driven by the market for late-model used vehicles, high prices led to a richer mix of vehicles being sold within market classes.
Although pickups have been the strongest segment over the past year, they underperformed in July. Increased supplies are starting to work their way into the wholesale market, but there is still a shortage of late-model, low-mileage units, according to Manheim.
Manheim Used Vehicle Value Index; January 1995 = 100; Source: Manheim Consulting