Manheim has reported that U.S. used vehicle prices declined slightly in the last quarter of 2013, but remained at historically high levels as consumer demand stayed strong.
According to Manheim, wholesale used vehicle pricing finished 2013 down 1.9% compared to the year-end levels of 2012. The findings were part of Manheim’s quarterly Used Vehicle Value Index conference call held earlier today.
Despite the decline for the year, used vehicle values in 2013 were well above the levels of five years ago when prices started to rise. Used vehicle supplies began to increase last year — along with increased new car sales — but strong demand in the retail market kept prices from falling dramatically, says Manheim.
Attractive financing and increased employment allowed more consumers to purchase used vehicles. In addition, a disciplined approach by automakers and dealers to the new car market also helped used car values.
“Wholesale used vehicle prices continue to hold up better than many expected,” said Tom Webb, Manheim chief economist. “Automakers and dealers showed restraint in their use of incentives on new vehicles, which helped maintain the value of used vehicles even as inventories increased. We also saw an increased emphasis on certified pre-owned vehicles, providing another boost to used vehicle values.”
Year-end pricing for wholesale vehicle segments included:
- Compact and midsize cars: both experienced pricing declines in the wholesale vehicle segment. Compact car pricing was down 1.3% and midsize car prices declined 3.3% in December year over year. Heightened competition kept prices down for both new and used vehicles in the compact and midsize car segments.
- Luxury cars: posted the largest pricing decrease of any segment, down 3.8% in December compared to the same month last year. Automakers offered attractive lease terms for new luxury cars, which put price pressure on used vehicles as well.
- Pick-ups and vans: both increased in pricing as the housing recovery continued to drive demand for these vehicles — largely used by small businesses for commercial work. Pickup pricing rose 3.4% and van pricing was up 1.2% in December year over year.
- SUV and CUV: pricing continued to drop. A decrease in demand for large SUVs pulled down the segment. The market also had a greater supply of CUVs as automakers increased production of these vehicles for the new vehicle market. SUV and CUV prices were down 3% in December, compared to the same month last year.
Wholesale used vehicle prices should decline slightly in early 2014 but remain at healthy levels, said Webb. An increase in new car sales and off-leased vehicles will increase supply, but consumer demand should also remain high.
“We do not expect fundamentals to materially change in 2014, although a few missteps may occur along the way,” Webb said. “In the first quarter, for example, it’s possible that wholesale supplies may rise faster than expected, and those vehicle segments dependent on tax-refund-fueled demand may once again be disappointed by unpredictable, uneven and relatively low disbursements from the IRS.”