Franchised Up and Independents Down in Sales, Pricing in Recent Years Staying Stable June 11, 2015

Franchised Dealers Benefit from CPO Sales Uptick in May

Tom Kontos
Executive VP & Chief Economist
ADESA Analytical Services

Wholesale used vehicle prices saw a significant drop from April (down 2.5%) and a modest climb from May 2014 prices (up 1.1%). Seasonal factors are part of it, but increasing supply is having an effect on downward prices. As for dealers, franchised saw an uptick in sales with CPO sales helping quite a lot, while independent dealers had year-over-year declines in used vehicle sales volume.

Here’s the latest edition of Kontos Kommentary

May Wholesale Prices Came in at $10,440 – Down from April’s $10,711:
Only Fullsize Vans, Mini SUVs and Fullsize SUVs had price increases.

Manufacturers and Fleet/Lease Consigners Saw Prices Decline M-O-M and Y-O-Y:
Dealer consignors saw 2.6% price drop from April, but had 1.8% increase relative to May 2014.

Franchised Dealers Had 3.6% Y-O-Y Increase in Used Vehicle Sales:
CPO sales set new highs in May, up 8.3% M-O-M and up 12.2% Y-O-Y.

Wholesale Used Vehicle Prices Dip for Fourth Consecutive Month

Tom Webb
Chief Economist
Manheim Consulting

Wholesale prices declined for fourth consecutive month in May. The Manheim Used Vehicle Value Index finished the month at 123.8, which represented a decline of 0.7% from a year ago. Looking at 20-plus year history of Index showed that pricing over the past five years has been elevated and stable. Even with recent price declines, the Index is only 3.1% lower than the peak reached in May 2011.

Manheim Used Vehicle Value Index for May 2015

Encouraging for Values that New Vehicle Transaction Prices Continue to Rise:
Incentive spending is flat and new vehicle inventory levels are at a normal level.

Used Vehicle Retail Sales Rose 5% in April, After Being Down in First Quarter:
Conversations with dealers suggest turnaround continued in May, with CPO sales boosting it.

For Pricing Tiers, Vehicles Sold in $9,000 to $11,000 Range Showed Weakness:
Volume of vehicles offering in that price range was up considerably from a year ago.
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