What follows is the June 2011 Kontos Kommentary on current used vehicle market conditions, presented by Adesa's chief economist Tom Kontos:

Summary

Average wholesale prices fell in June for the second month in a row, putting them approximately $340 less than their peak in April and about $375 less than their all-time peak in April 2010.  Some of this moderation in prices is seasonal, and tight supplies plus steady demand should keep used vehicle prices from dropping dramatically.

Moreover, late-model used vehicle prices remain strong, as dealers struggle to find off-rental, off-lease, off-fleet and other used vehicles that would have been sold new in the lean years of the 2008-2009 recession.  This is particularly true for franchised dealers who would normally find a steady supply of late-model used vehicles in "closed" auctions held by their manufacturers.  As these dealers search for units in "open" sales, this puts upward pressure on prices and limits the availability of units for independent and buy-here-pay-here dealers seeking older vehicles.

Details

According to ADESA Analytical Services' monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in June averaged $10,235 - down 2.2% compared to May and 0.5% lower than June 2010.  On a year-over-year basis, prices were strongest for compact cars and midsize cars (up 12.8% and 13.2%, respectively) and weakest for fullsize pickups and SUVs (down 11.0% and 19.3%, respectively), indicating continued sensitivity to high gas prices among dealers bidding on these vehicles in-lane and online.  Luxury cars and SUVs also took significant hits in value.

Manufacturers registered a 4.9% month-over-month price increase and a 9.2% year-over-year rise.  These tend to be the youngest units sold at auction and are in shortest supply.  Fleet/lease consignors experienced a 3.4% sequential price decrease and a 0.5% annual increase.  Dealer consignors saw a 0.2% average price decrease versus May and a 10.6% uptick versus June 2010, indicating that dealers are still finding a ready wholesale audience for their aged units and unwanted trades - though the clock is ticking.

ADESA Analytical Services estimates that auction industry inventory levels stood at 24 days at month-end compared to 30 days last June, as used vehicle supply remains tight.

Based on data from CNW Marketing/Research, retail used vehicle sales in June were up 5.0% year-over-year for franchised dealers, but down 5.8% for independent dealers.  However, on a month-over-month basis, used vehicle sales were up for both groups (10.0% for franchised dealers and 7.5% for independents).  Through mid-year, franchised and independent dealers have sold almost 672,000 (5.2%) more used vehicles than last year.

Wholesale Used Vehicle Price Trends Average Prices ($/Unit) Latest Month Versus: Jun-11 May-11 Jun-10 Prior Month Prior Year Total All Vehicles$10,235 $10,461 $10,282-2.2%-0.5%Total Cars$9,772 $10,030 $9,031-2.6%8.2% Compact Car $7,575 $7,819 $6,718 -3.1% 12.8% Midsize Car $8,321 $8,651 $7,350 -3.8% 13.2% Fullsize Car $5,913 $6,447 $5,739 -8.3% 3.0% Luxury Car $14,249 $14,264 $14,507 -0.1% -1.8% Sporty Car $13,570 $13,818 $12,425 -1.8% 9.2% Total Trucks$10,733 $10,925 $11,772-1.8%-8.8% Mini Van $7,370 $8,021 $7,621 -8.1% -3.3% Fullsize Van $8,814 $8,785 $8,715 0.3% 1.1% Mini SUV $10,433 $10,821 $10,456 -3.6% -0.2% Midsize SUV $9,702 $9,928 $10,582 -2.3% -8.3% Fullsize SUV $12,574 $12,840 $15,581 -2.1% -19.3% Luxury SUV $19,827 $19,911 $22,129 -0.4% -10.4% Compact Pickup $7,341 $7,379 $7,100 -0.5% 3.4% Fullsize Pickup $10,799 $10,709 $12,128 0.8% -11.0% Source: ADESA Analytical Services. May data revised.