Wholesale Used-Vehicle Prices Up in June, Manheim Reports
June wholesale used-vehicle prices reached their highest level in four years, rising for the third consecutive month, according to Manheim.
ATLANTA — June wholesale used-vehicle prices reached their highest level in four years, rising for the third consecutive month, according to Manheim.
Manheim’s Used Vehicle Value Index — a measure of wholesale prices adjusted for mix, mileage and season — increased to 126.2, just 1.3% shy of the record high reached in May 2011.
“Despite the second quarter’s uptick in pricing, there’s no doubt that the overall long-term trend for wholesale pricing is still down,” said Tom Webb, chief economist for Cox Automotive. “With this in mind, every modest step up in pricing should be taken advantage of given that each is likely raising the floor to which prices will fall in this cycle.”
Total used retail unit volumes increased by an average of 4% in the first five months of 2016. According to the National Automobile Dealers Association, franchised and independent dealers saw used retail unit volume rise 3% and 6%, respectively. This trend, Manheim stated, indicates overall long-term stability in the market.
“These gains exceed what the fundamentals of employment gains, credit availability and ownership needs would suggest and more likely reflect the forced churn caused by higher wholesale supplies,” Webb said. “With this environment remaining in the second half of the year, experts predict continued pressure on pricing and gross margins.”
According to Manheim, strength in wholesale pricing remains concentrated in pickups, vans and certain sports cars. Those same segments, Manheim added, are also seeing the strongest increases in average new-vehicle transaction prices. Wholesale pricing for all other classes were either flat or down.
Pickups and van pricing was up 8.1%, the most of all segments by a large margin. SUVs and CUVs continue to thrive thanks to cheap gas and a favorable lending environment. In June, the segment’s wholesale used-vehicle pricing grew 1.3%. Luxury car wholesale pricing also grew slightly by 1%.
Midsize cars were up slightly in June, growing 0.2% over the same time last year. Compact car prices, however, were down 2.4% in June, representing the biggest downward swing in pricing of all car classes.
The auction prices for rental risk units grew nearly 18% from a year ago. In June 2015, the average mileage on rental risk units was a record breaking 51,200 miles. This year, that number saw a significant drop to an average of 38,500 miles, the lowest since December 2013. June’s mix of crossovers and vans was significantly higher, while the share of rental risk unit sales accounted for by midsize cars was down, Manheim stated.
Originally posted on F&I and Showroom
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