Although wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) fell in May, the Manheim Used Vehicle Value Index reading of 124.7 represented a 4.7% increase from a year ago, according to Manheim Consulting.
Readily available retail financing at attractive terms has enabled dealers to achieve healthy profits on the subsequent retail sale of their auction purchases, says Manheim. In addition, the competitive retail used vehicle marketplace has become more so as franchised dealers increasingly focus on (and improve) this side of their business.
In May, new cars and light-duty trucks sold at a seasonally adjusted annual rate of 16.7 million. That was considerably above the consensus forecast that looked for something in the low 16-million range, according to Manheim. Nevertheless, there’s no denying that the retail new vehicle market was hot in May, especially given the other measures of consumer spending in recent months, says Manheim.
According to CNW, total used vehicle sales in May were unchanged from their year-ago level, but that was the result of an 8% decline in private-party transactions. The combined used vehicle sales of franchised and independent dealers were up 4% in May and 2.5% year-to-date. Combined with increased sales in each of the past four calendar years, means that dealer used vehicle sales are on track to set a record in 2014.
Unadjusted for mileage and mix shifts, auction prices for rental risk units declined in May from their April high, but remained 5% above their year-ago level, according to Manheim. Volumes sold at auction remained on the low side, but with increased new vehicle sales into rental in May, wholesale supplies should pick up in coming months.
Similar to April, all major market classes have year-over-year prices gains. Pricing for pickups remains strong. Although the year-over-year gain for compact cars is 4.3%, their pricing has been soft in recent months, says Manheim.