Manheim: Tax Refunds Returned to Normal, NADA: How Older Used Vehicles Can Be Strong March 10, 2016

February Sees Fastest Wholesale Value Decline in More than Three Years

Tom Webb
Chief Economist
Cox Automotive

February saw its fastest decline in wholesale used vehicle values in more than three years. The Manheim Used Vehicle Value Index came in at 123.3, a 1.4% decline from a year ago. The Index had been above its long-term trendline for 66 of the past 72 months, and the past month saw more of a return to that trendline. Market adjustments may be modest and supportive of retail financing for the used vehicle market in the near term.

Check out the latest Manheim Consulting monthly report

Tax Refunds Had Been Down Due Primarily to IRS Computer Outage:
By late February, tax refunds had returned to normal for car purchases.

CPO Sales Rose 7% in February with Year-to-Date Gain of 2.5%:
Total used vehicle sales up 8% in January with more modest rise in February.

Luxury Cars Outperformed Overall Market but Y-O-Y Were 2nd Weakest Segment:
Values for compact cars continued to fall, both in recent months and over past year.

NADA UCG Studies How Wholesale and Retail Used Prices Have Varied

Jonathan Banks
Executive Automotive Analyst
NADA Used Car Guide

NADA Used Car Guide has analyzed how used vehicle wholesale prices at auction and retail price premiums have varied in recent years. Since 2008, wholesale prices began to rise due to low supply, easier credit, and an improved attitude among consumers and dealers about the used car market. In the past two years, the average wholesale price increased to an all-time high of nearly $16,000. Prices in the used retail market also increased – up 18% from 2007 to 2015.

Read more on the Used Vehicle Premiums report

Spread between the Two Greatest in 2008 at 41.3% Right Before Crash:
At 33.4% in 2012, lowest in past decade, and only increased to 35.3% in 2015.

Spread between Used Compact Cars Declined by 11% from 2006 to 2015:
In contrast, luxury segments showed narrower spread during this period.

Older Used Vehicles May Not Be as Inexpensive as Expected:
May have higher retail premiums as dealers will need to spend more on reconditioning.
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