ATLANTA — Wholesale used-vehicle prices on a mix-, mileage-, and seasonally adjusted basis increased by 0.2% in December, according to Manheim. Compared to December 2015, the Manheim Used Vehicle Value Index declined 0.6% to 124.9.
For 2016 as a whole, the Manheim Index came in at 125.1, up 0.3% over the year prior and the third year-over-year increase in a row. According to Manheim, the most notable aspect of wholesale pricing in recent years has been the stability.
“After a sharp rise in wholesale pricing in 2009 and 2010 coming out of the recession, the absolute year-over-year change in pricing was less than two percentage points in each of the last six years. Statistically speaking, this period has shown the least volatility in wholesale vehicle pricing since the Manheim Index’s inception in 1995,” the Manheim report read.
While overall wholesale prices have been stable in recent years, the differences between market classes have become more pronounced, Manheim stated. The two extreme examples, the company added, are pickups and compact cars. On one end, pickup prices have risen 28% over the last four years, while on the other, compact car values have fallen 14% over the same period.
The reason for this price disparity: a tremendous consumer preference shift toward crossovers and away from small sedans, Manheim stated. For the new-vehicle market, the market’s flexible production capacity allowed the new-vehicle market to adapt to this shift and produce more of what consumers wanted.
But, on the used-vehicle side, “… the ‘production of used vehicles’ can’t be adjusted. As a result, the supply of used compact cars has been higher than what consumers demanded in recent years, and as a consequence, residuals suffered,” the report read.
The 2016 calendar year was also a good year for the used-vehicle retail market, according to Manheim. While new retail vehicle sales were essentially flat in 2016 over the prior year period, used unit retail sales by dealers grew by more than 4%. For 2017, the growing wholesale supplies and lower auction prices are expected to continue pushing used retail higher, according to Manheim.
Originally posted on F&I and Showroom