Manheim: Wholesale Up But Not for Long, ALG: Economics Look Good for Residuals November 13, 2014

Wholesale Prices Move Up for First Time in Months

Tom Webb
Chief Economist
Manheim Consulting

Wholesale used vehicle prices moved up in October, after declining in each of the previous five months. The Index was down only 0.4% from October 2013. Non-seasonally adjusted prices fell during the month but the decline was less than normal and took place while significant volume increases were present. The strength likely came from higher new vehicle transaction prices, stable incentives, and renewed consumer interest in used vehicles. Even so, wholesale price declines are in the offing.

Check out the latest Manheim Used Vehicle Value Index

Dealers Once Again in Acquisition Mode During October Market:
That came about after eliminating some inventory-intensive positions in Q3.

Auction Volumes of Rental Risk Units Were Up Significantly in October:
Average mileage was at record 44,800 miles, and auction prices down 6% from year ago.

Pickups and Vans Still Strongest Used Pricing Segments Year-Over-Year:
Midsize and compact car still suffer from new vehicle pricing and greater consumer interest in small crossover segment.

Gasoline Prices So Far Haven’t Thrown Off Residual Values

Eric Lyman
VP, Industry Insights

Economic indicators have been strong recently. Employment growth has been strong during 2014, averaging 227,000 jobs created per month; the unemployment rate fell in September to 5.9%. GDP is expected to rise by approximately 2.2% in 2014 and 3.1% in 2015. Oil and gasoline prices have plummeted in recent weeks on lower expectations for global growth; this is expected to be positive for US consumer confidence. Overall macro impact for November/December compared to September/ October is +0.1 percentage points (ppts).

Here’s ALG’s Industry Report for November/December 2014

No Vehicles Had Significant Residual Changes Due to Gasoline Prices:
Overall macro impact for November/December compared to September/ October is +0.1 ppts.

At the Industry Level, ALG’s Supply Forecast Rose for this Edition:
Causing a -0.05-ppt reduction impact on residual values.

Segment-level Supply Changes Have Varied in the Marketplace:
Ranging from -0.3 ppts for Compact Utility to +0.3 ppts for Midsize Pickups.
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