COX AUTOMOTIVE – Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) declined 3.3% month over month in March. This brought the Manheim Used Vehicle Value Index (MUVVI) to 223.5, an increase of 24.8% from a year ago. The non-seasonally adjusted price change in March increased 0.6% compared to February, leaving the unadjusted average price up 23.2% year over year.
“We anticipate the second quarter – and particularly April – will be the strongest part of the year for used-vehicle sales and values,” said Cox Automotive Chief Economist Jonathan Smoke. “Once we get through the spring, we expect demand to wane somewhat and should see closer to normal price depreciation patterns for the rest of the year. That said, we think our call for not expecting a price crash in 2022 – just depreciation – is still very likely given continued challenges with supply conditions.”
Manheim Market Report (MMR) values saw weekly price increases that accelerated in each full week of March after the first week saw the smallest decline thus far this year. MMR is a valuation tool used by tens of thousands of consignors and dealers to assess millions of trade-ins each month. It is designed to be highly stable and avoid overreacting to short-term market ups and downs to provide an accurate measure of vehicle valuations regardless of market conditions.Over the last four weeks, the Three-Year-Old Index increased a net 1.2%. In the same period, daily MMR Retention, which is the average difference in price relative to current MMR, averaged 99.6%, which meant that market prices were slightly behind MMR values. The average daily sales conversion rate in March increased month over month to 57.1% but remained below the normal level for this time of year. For example, the sales conversion rate averaged 62.7% in March 2019. The lower conversion rate indicates that the month saw buyers with more bargaining power than is normal at this time of year, but the sales conversion rate increased as March progressed. A higher conversation rate signals more buyer interest and more competition for vehicles.
All major market segments saw seasonally adjusted prices that were higher year over year in March. Vans had the largest year-over-year gains, followed by compact cars, while pickups and luxury cars lagged the overall market. On a month-over-month basis, all major segments saw seasonally adjusted price declines, with pickups declining the most. The seasonal adjustment drove most of the declines. Most major market segments saw price gains from February, with midsize and compact cars increasing the most, while vans declined.
“Recent declines in the MUVVI are driven mostly by the seasonal adjustments. In fact, the wholesale used-vehicle market was gaining strength in the final weeks of Q1, a sign the spring bounce is finally here,” said Chris Frey, senior manager of economic and industry insights, Cox Automotive. “We expect to see strengthening wholesale values in April and May, with an uptick in demand for used vehicles, driven in part by tax refunds putting more cash into the economy.”