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January 2015 Wholesale Used Car Values Trend Report

Wholesale prices: the New Year starts with a bang

January 2015 has started where 2014 left off: with rising prices. Manheim consulting’s used vehicle index is now up for the fourth month running – and 2.5% up from January 2014 (adjusted for mix, mileage and season).

In fact, the January increase has pushed used vehicle prices to their highest water mark since April 2012 – when off-lease volumes were at their nadir – and has left many auto analysts confused. Actually, strong used vehicle prices are in lockstep with continued strong new vehicle transaction prices and used retail vehicle results.

Used vehicles: sales and dealer profits both riding high…

According to research by auto specialists CNW, in January 2015, dealer used vehicle sales increased by 1.4%. And January was a bumper month for CPO sales jumped a massive 17%. Although, the strong results should not come as a complete shock, given the strong used operation results reported by both public and private dealer groups in Q4, 2014. And the good news was that the big volumes were not at the expense of gross or turn rates.

Manheim also believe that year end accounts for the seven listed dealerships will show that Q4 same-store used retail volumes will have increased for a startling 22nd consecutive quarter. Gross margins might be maintained following years of fall back. Macro factors including labour market and credit conditions will favour strong used unit sales for 2015. However, Manheim suggest that dealers will need to draw on their experience in superior inventory management to maintain margin given the potential for volatility and softening wholesale values.

Rental risk market: pricing maintained

January Rental risk unit prices, adjusted for mix and mileage, showed an increase on December’s prices. But strip out the adjustment, and January prices were actually down on December, and effectively equal to January 2014 prices. But average mileage on sold units continued to exhibit the December’s record pricing.

Price stability across the market segments 

Manheim suggest that prices are being maintained across all the price categories, and that this is independent of differences in volumes of the differing price tiers. This may be indicative of an efficient market and a competitive bidding process.

But compact cars continue to show wholesale price weakness. This is most likely due to competitive pricing for new compact cars and heightened wholesale supply. And the recent downward spike in gas prices will increase pressure on the compact segment.

But auction prices for dealer-consigned units sold in January were somewhat up year-on-year – on increased volumes and mileage.

 

Posted by: Farra Majid on Sunday, February 8th, 2015 at 2:47 pm in DEALERS, INDUSTRY