Used Car Market Sees Strong Year-End Close

As consumer demand for used cars and trucks remained strong, wholesale used vehicle values increased 1.8% from a year ago and were 2.1% higher than the third quarter. The Manheim Used Vehicle Value Index — a measure of wholesale prices adjusted for mix, mileage and season — ended the year at 123.9.

An improving job market and attractive financing helped boost the retail market for new and used vehicles, according to Manheim. During the fourth quarter, the strongest demand for used vehicles was in the $13,000 to $15,000 range.

Sales of certified pre-owned vehicles, late-model vehicles (still backed by a warranty) also hit record numbers in 2014, says Manheim.

"The used vehicle market finished another solid year," said Tom Webb, Manheim’s chief economist. "Consumers continue to see great value in purchasing used vehicles, even at higher price points. Dealers continue to see used vehicles as an important and profitable part of their business."

Here is the fourth-quarter wholesale pricing by vehicle segment, according to Manheim:

• Compact car prices were down 1.1% in December, compared to the same period last year, as consumers moved to CUVs and mid-sized cars.
• Midsize cars had been one of the weaker segments during the year, but it saw values end December at 2.2% higher than the same period last year.
• Luxury car values fell 0.4% on a year-over-year basis, holding their prices despite an increase in supply from off-lease vehicles.
• Pick-ups and vans remained the strongest segment, with pick-ups up 6.1% and vans up 3.1% on a year-over-year basis. Often purchased for business use, demand for these vehicles has increased during the year.
• SUV and CUV also continued to be a popular segment, up 2.8% in December compared to the same period last year.

"The growth rate in the U.S. auto market is expected to slow down and level off in 2015," Webb said. "The big question is whether automakers will be satisfied with their respective slice of the pie. If they aren't satisfied and resort to heavy incentives, prices and profits will fall."