ATLANTA — The Manheim Used Vehicle Value Index reached a record high for the fifth consecutive month in September, increasing 6.3% from a year ago to 134.9. The reason, according to analysts with the firm, was replacement demand related to hurricanes Harvey and Irma, which drove up wholesale used-vehicle prices 2.77% on a month-over-month basis.
On a year-over-year basis, all major market segments realized gains in value, including midsize cars. Luxury cars, pickups, and vans, however, outperformed the overall market.
“Though wholesale market values continue to show strength as a result of growing retail demand, most of this price strength can be attributed to the recovery following Hurricane Harvey and Hurricane Irma,” the firm noted. “Replacement demand combined with a reduction in available supply is causing wholesale inventories to tighten. The impact to the wholesale market is widespread, providing additional support for the likely continued wholesale price gains for at least another month or two.”
Replacement demand was felt in the new-vehicle market as well, with September’s new-vehicle sales volume jumping 6% year over year with one more selling day compared to September 2016. And with a seasonally adjusted annual rate of 18.5 million, this was the highest September SAAR reading in three decades and the highest monthly SARR level since July 2005.
By segment, cars continued to fall out of favor with consumers, with September sales falling 3% from a year ago and all major car segments registering sales declines. In contrast, light trucks were up 12% year over year, with both the Ford F-Series and Chevy Silverado up 21% year over year.
On a year-to-date basis, new-vehicle sales are down 2% compared to the year-ago period.
Combined rental, commercial, and government purchases of new vehicles were up 7%, led by gains in commercial (up 26%), rental (up 2%), and government (up 4%) fleet channels. Overall fleet sales are down 10% for the year vs. 2006.
As for used, sales were up 8% year over year in September, with the month’s used-vehicle SAAR increasing from August’s 38.1 million read to 40.4 million units. “The retail growth in used sales is coming from vehicles less than four years old, which have grown 5% year to date versus the same period last year,” the firm said in its report. “Vehicles less than four years old represent the largest age segment of vehicles in the used-car market.”
Manheim also noted that the economy “continues to chug along” with GDP growth of 3.1% in the second quarter — the strongest quarter in more than two years. “The economy was gaining momentum this summer, and that growth would have continued in the third quarter had we not had the disruption of the severe hurricanes in August and September,” the firm said. “The hurricanes disrupted auto sales, home sales, and retail sales in August. Consumer spending had grown a robust 0.3% in July from June, but increased only 0.1% in August. Adjusted for inflation, purchases declined 0.1%, which was the first decrease since January.
“Spending is expected to rebound in subsequent months to more than make up for the August disappointments,” the firm added. “We are clearly already seeing that in auto sales.”
Originally posted on F&I and Showroom
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