Wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) declined 1% in July, which resulted in a Manheim Used Vehicle Value Index reading of 122.7 — an increase of 1.5% from a year ago.

This was the third consecutive monthly decline in wholesale pricing. Prices have been on a secular downward trend since the all-time peak in May 2011, but the movements have been modest — and there have been several up-cycles within the larger trend, says Manheim.

Recent price movements reflect an adjustment that many thought would occur earlier in the year, says Manheim. The fact that it arrived prior to a period of historical seasonal weakness in pricing and impending wholesale supply increases only intensified the fear of a collapse. But such a collapse cannot come from industry forces alone — it would also require a significant altering in the current trajectory of labor market and credit conditions.

After posting upside surprises in May and June (16.7 million and 16.8 million, respectively), new vehicles sold at a seasonally adjusted annual rate of 16.4 million in July, says Manheim. That was a slight disappointment from the expected 16.6 million rate. In practice, it is best to look at the selling rate on a three-month moving average basis. By that measure, sales are currently running at 16.7 million rate — a level that will exceed this year’s full-year total.

According to CNW, used vehicle sales were also a slight disappointment in July. Sales by dealers were down more than 5% during the month, which produced a year-to-date decline of 0.5%. But alarm bells should not be set off. Dealers are continuing to report good turn rates and strong profits.

Auction prices for rental risk units (adjusted for mileage and mix shifts) moved up marginally during July, but were flat versus a year ago, says Manheim. Unadjusted for mix and mileage shifts, rental risk prices were down for both the month and year-over-year. Average mileage on rental risk units sold at auction continued to increase and reached nearly 41,000 miles, up 11% from a year ago.

Pricing for compact and midsize cars has resulted in a competitive marketplace for both new and late-model used units, says Manheim. Given the plethora of high-quality offerings, it is tough for any one model to stand out.