Manheim and ADESA both See Used Supply Notching Up, but Dealer Demand Strong Enough to Stabilize Prices June 13, 2014

Wholesale Supplies Up but Dealer Demand Strengthened Prices

Tom Webb
Chief Economist

While wholesale used vehicle prices softened in May from the previous month, they were 4.7% higher than a year ago. The Index dropped from 124.9 in April 2014 to 124.7 in May, though it was higher than the 124.4 level reached in March 2014. The continued pricing strength reflects a strong retail market and only modest increases in wholesale supplies.

Here’s the Manheim Used Vehicle Value Index report for May

Accessible Retail Financing at Attractive Terms Helps Dealers Stay Profitable:
Another factor: retail used always competitive as franchised dealers increasingly focus on and improve this side of their business.

Franchised Dealers Up 4% and Independent Dealers Up 2.5% Year-to-Date:
Increase in used vehicle sales volume means dealers on track to set record in 2014.

Rental Risk Unit Prices Down from April High but 5% over Year Ago:
Average mileage for rental risk remained steady at just below 40K miles.
Tom Kontos 2014 photo

Retail Demand Spurred by CPO Helped Offset Off-Lease and Off-Rental

Tom Kontos
Executive VP & Chief Economist
ADESA Analytical Services

Wholesale prices softened in May from an April spring market/tax season peak. That softening could be a precursor to even more price decline especially in areas like the Northeast where off-lease supply growth is expected to be concentrated. Retail demand was strong enough to offset off-rental and off-lease volume. Demand for certified pre-owned (CPO) units help offset the growing supply.

Check out the Kontos Kommentary edition covering the May market

There Was Some Hesitancy from Sellers to Accept Lower Prices in May:
That was reflected in low conversion rates for those consignors.

ADESA Analytical Services Found Average UV Price to be $10,321:
Down 1.5% from April, up 5.4% from May 2013; truck prices continued to be firmer than car prices.

Dealer Consignors Saw 2.5% Price Drop from April and 3.7% Up Over May 2013:
Came from units obtained in part from trade-ins as May saw strong new vehicle sales.
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