Tag Archive | "wholesale pricing"

Wholesale Used-Vehicle Prices Increase in December, Manheim Reports

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.

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New-Vehicle SAAR Falls Below 17 Million in August, Manheim Reports

ATLANTA — The seasonally adjusted annual rate (SAAR) for new vehicles fell below 17 million for the second time this year in August, according to Manheim. The firm, however, said the drop should not be cause for concern, noting that it “may be a good think.”

A lower SAAR, the company stated, points to manufacturers not overly pushing the market. Although incentives in August were up compared to a year ago, they were flat sequentially. This was caused by a lot of stair-step money not being dispersed during the month due to dealers not reaching their quotas.

Preliminary numbers also show that a reduction in lease incentives might have caused a year-over-year decline in lease penetration rates in August, according to the company.

While leasing and new-vehicle sales stumbled this month, used-car sales are thriving.

“In the first seven months of 2016, used unit sales by both franchised and independent dealers increased at the fastest pace of this recovery, and more than twice as fast as last year. While new retail unit sales have declined this year, used unit sales are up. That’s normal for this point in the automotive cycle, and we expect it will continue into 2017,” read Manheim’s Used Vehicle Value Index report for August.

Certified pre-owned sales rose 6% in August compared to a year ago and 4% year to date, according to Manheim. The company said it expects full-year sales to reach a record 2.7 million.

Wholesale used-vehicle prices declined slightly in August, according to Manheim. However, the recorded Manheim Used Vehicle Value reading for the month was still 2.1% higher than the same time last year at 126.9.

According to Manheim, wholesale pricing this year has been supported by a retail market that has experienced higher volumes, stabilizing margins and respectable turn rates. But primarily, Manheim stated, wholesale pricing has been supported by the improved efficiencies in dealers’ used-vehicle operations.

A couple issues that played a part in last month’s decline in used-vehicle pricing, according to Manheim, were a lack of growth in hourly earnings and a cut to the average work week during the month. In terms of aggregate demand, Manheim added, the combination of these factors equated to a loss of 300,000 jobs during August.

For the second consecutive month, the number of people employed part time for economic reasons grew in August, the company stated.

“How did the financial markets react to this? With glee. They took it as a sign that rates would not be hiked at the September meeting, even though the normalization of monetary policy is long overdue. Federal-funds futures put the odds of a rate hike this month at only 32%, and only 60% by December,” Manheim noted in its report.

However, this mindset is misguided, according to Manheim. The company said it expects employment growth to slow over the next year and, and in order for the market to thrive, employment needs to grow. But low interest rates will not help employment growth, the firm added.

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July’s 2.3% Drop in Wholesale Prices Ties June Record, NADAUCG Reports

MCLEAN, Va. — Wholesale prices for vehicles up to eight years in age fell 2.3% in July, tying June for the biggest drop recorded so far in 2016, according to the NADA Used Car Guide. As a result, the firm lowered its seasonally adjusted used vehicle price index 1.1% to 118.9 .

The largest decline in wholesale price was recorded in the subcompact car segment, which saw prices drop 3.9% compared to June’s figures. Mid-size and compact cars followed a similar trend, with each segment recording an average price decline of 2.9% compared to the prior month. Prices for large cars fell 2.5%, higher than the industry average but better than the 2.8% decline the segment experienced last year.

The large pickup and large utility segments continued to show strength, with prices for each segment falling 0.5% and 0.3%, respectively, compared to the prior month. While other large vehicle segments experienced slightly higher depreciation, the majority of the declines were still under the industry average.

Mid-size pickup prices fell 1.4%, compact utility prices dropped 1.7%, mid-size utility prices dipped by 1.8%, and vans dropped 2.7%.

According to the NADA, the luxury segment was a mixed bag in July. Small luxury vehicles experienced greater losses, while mid-size and large luxury vehicles fared slightly better. The biggest decline in the segment came from luxury compact utility prices, which fell 3.1% from the prior month. Compact car prices fell 2.7%, while luxury mid-size cars and luxury large car prices fell by 2.1% and 1.8%, respectively.

Year to date, used-vehicle prices were 12.5% lower than they were at the end of 2015. Last year, depreciation reached a lesser 9.6% over the same period, according to the NADA.

Compared to all of 2015, subcompact prices have fallen 19.9% year to date. Compact car prices have fallen 16.2%, and mid-size and large car prices have fallen 14% to 14.4%. Year to date, large pickup prices are down 6.8%, while large utility prices are down 5.7%. Mid-size pickups are down 6.3% compared to full-year 2015.

The only segment to experience an improvement in depreciation relative to last year was the large utility segment, which saw prices fall 5.7% through July. For the same period last year, wholesale prices fell 7.1%, the NADA Used Car Guide noted.

Sales volume at auction was also on the decline during July. However, the firm noted, the decline is typical for the time of year. July’s decline marked the fourth monthyl decline in a row. On a year-to-date basis, however, volume is up 6%.

Looking forward, depreciation is expected to accelerate as the market enters what is typically the softest part of the year, according to the NADA. In next month’s report, the NADA Used Car Guide expects used-vehicle prices to fall even more than they did in July. August’s used-vehicle prices are expected to fall by 2.5% to 3% compared to July’s figures. Subcompact car prices are expected to drop by about 3% on a monthly basis, while compact, mid-size and large car prices are expected to fall 2.7%.

Compact utility and mid-size utility prices are expected to decline 2.3%, while mid-size van prices are expected to fall 2.7%. Large pickup and utility pricing are expected to suffer the softest decline at 1.8%, while luxury segment losses are expected to average about 2.5%, according to the firm. In September and October, prices are expected to fall around 3.2% to 3.7% per month.

NADA Used Car Guide’s full-year forecast for 2016 has prices down by an average of less than 5% on an index-basis from 2015.

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Wholesale Prices Rise Again in May, Manheim Reports

ATLANTA — Wholesale used-vehicle prices increased again in May, suggesting dealers have continued to achieve efficiency gains that allow them to bid-up auction prices even as gross margins narrow.

The May increase, which followed an April increase, resulted in a year-over-year gain, according to Manheim’s Used Vehicle Value Index.

Total used retail unit volumes rose 6% in the first four months of 2016. Preliminary numbers suggest sales rose again in May. Likewise, CPO sales jumped 6% in the first four months of the year, increasing again in May.

“Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased in May, resulting in a Manheim Index reading of 124.5,” Manheim stated in its report, in part. “The large monthly rise, combined with weakness this time last year, resulted in a year-over-year gain — the first since December of last year.

New vehicle sales: New car and light-duty trucks sold at a seasonally adjusted annual selling rate (SAAR) of 17.4 million in May. The number was an improvement over April’s 17.3 million pace, but below last May’s 17.6 million.

For the first five months of 2016, the SAAR averaged a modest 17.2 million, despite heavier fleet sales. In the first five months, new-vehicle purchases increased 8% for rental car companies, 11% for commercial fleets, and 38% for government agencies.

“At the start of the year, there were indications that manufacturers were going to accept the leveling-off of sales at last year’s record pace, but announced incentives for June picked it up,” Manheim stated in its report. “Overall, new-vehicle inventory levels are reasonable, but the mix is imbalanced. On net, we expected the new-vehicle market will have a slightly negative impact on used-vehicle residuals in the coming months.”

Unadjusted prices: A straight average of auction prices remained well above year-ago levels in May due to the share shift toward commercial consignment and lower average mileage for both dealer and commercial consignment.

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Q3 Used-Car Market Remains Strong, Manheim Reports

ATLANTA — With wholesale used-vehicle prices increasing in September for the fourth consecutive month, wholesale pricing remains one of strength and stability. This brought the Manheim Used Vehicle Value Index — a measure of wholesale prices adjusted for mix, mileage and season — to a reading of 124.8 in September, representing an increase of 2.8% from a year ago.

“Wholesale pricing trends have defied expectations from analysts at the beginning of the year, but used-vehicle values are not defying market fundamentals,” said Tom Webb, chief economist for Cox Automotive. “With pricing up nearly three percent from last September, consumers continue to see the increased value in purchasing used vehicles.”

Despite a bad September employment report, with earnings remaining flat and a decrease in the labor force participation rate, the economic outlook remains solid and the number of job openings is strong — adding to both lender and consumer confidence. Illustrating this, the weakest pricing tiers remained in the $9,000-$11,000 range while luxury cars and SUVs and CUVs showed modest gains.

Compact car wholesale prices were down 5.4% in September compared to the same period last year, and once again remain the only major market segment with lower pricing versus a year ago. Mid-size cars also remained one of the weaker segments, but saw an increase of 2.6% compared with the same time period last year.

Luxury car values had a small gain of 0.5% over the same period last year, and remain weak considering this was also the case for last year’s pricing. The small gain can also be attributed to more efficient re-marketing of cars in this class. SUVs and CUVs rose 3.1% compared with last September, helped by an increase in vehicle miles of travel and lower gas prices. Pickups and vans once again won the top spots, with pickup pricing up a significant 11.8% and vans up a more modest 5.1% on a year-over-year basis.

“Used-vehicle operations — including CPO sales — should be set up well for October given that new vehicle inventory levels are down thanks to a higher sales pace last month,” Webb said. “Supporting the used-vehicle industry’s strength, low initial jobless claims in September and a high  number of open positions per job seeker is giving workers the confidence to borrow and lenders the confidence to lend.”

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Wholesale Used Prices Softened in October, Kontos Reports

CARMEL — Wholesale used-vehicle prices continued to soften during October in all three of the traditional auction industry seller segments (factory, fleet/lease and dealer consignment), according to ADESA Auction’s Tom Kontos.

Prices in October averaged $9,842, an increase of 0.9 percent vs. September and a 0.8 percent increase vs. the year-ago month, according to ADESA Analytical Services’ analysis. Additionally, car prices continued to correct downward and truck prices corrected upward as they reset from high gas prices earlier in 2011, reported F&I and Showroom magazine.

“Wholesale prices appeared to do an about-face as they ceased their sequential and year-over-year decline seen since peaking in April,” said Kontos, executive VP, customer strategies and analytics. “With Fall defleeting in full swing, off-rental units sold by manufacturers and rental companies in the factory and fleet/lease lanes and online made up a higher percentage of total auction volumes in October.”

Kontos added that off-rental units sold in October tended to be late-model, higher-dollar units and, as a result, contributed positively to average prices for the month. “Had the same proportion of vehicles been sold by each of the seller groups in September and October, average prices would have fallen by 2 percent on both a sequential and annual basis,” Kontos said. “Based on this analysis, we would conclude that wholesale prices continued the modest softening pattern described in our previous commentaries.”

Manufacturers registered a 3.1 percent month-over-month price decrease but did record a 5.1 percent year-over-year increase. Fleet/lease consignors experienced a 3.1 percent month-over-month decrease and a 0.4 percent annual decrease.

Dealer consignors experienced a 1 percent average price decrease vs. September and a 3.2 percent increase vs. October 2010.

The company estimates that auction industry inventory levels stood at 30 days at month-end, marking the second month in a row that days-supply of auction inventories matched year-ago levels. “Auction industry inventories had been below year-ago levels from July 2009 through August 2011, by our estimates,” Kontos said. “The rise in inventory levels is primarily a reflection of higher Fall defleeting.”

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