Wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased for the fifth consecutive month in October. This brought the Manheim Used Vehicle Value Index to a reading of 125.3, exactly where it started the year and up 2.9% from last October.
Continued strength in wholesale pricing is reflective of higher new vehicle transaction prices and a rewarding retail used vehicle environment. Higher wholesale prices, narrower gross margins, and record dealership profits are evidence that the benefits of increased dealership efficiency are being passed to consumers and enabling dealers to bid up prices in the wholesale market, according to Manheim.
In October, auction prices for rental risk units (adjusted for mileage and mix) showed a normal seasonal decline but were up 0.7% from a year ago, says Manheim. There was a smaller monthly decline in the straight average of rental risk pricing than in mix-adjusted series since pickups, crossovers and vans accounted for a greater share of off-rental volume in October than in September.
Last month, auction volumes for rental risk units were down significantly from last October, since last year’s normal August and September de-fleeting was pushed into October — due to several recalls that impacted many units in the rental fleet.
Compact cars remain the weakest segment, both in recent months and over the past year. Although wholesale pricing for luxury cars has been soft during the past year, October was relatively good. But don’t expect that trend to continue given the influx of off-lease luxury units that will come in November and December, according to Manheim.