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July 2015 Wholesale Used Car Values Trend Report

Wholesale prices: getting a rise out of the summer…

Last month, used vehicle prices stopped declining after four months, according to Manheim Consulting. In July, wholesale prices (on a mix-, mileage-, and seasonally adjusted basis) rose – albeit marginally. Manheim notes that 12 months ago, seasonally adjusted prices were falling. However, comparing July 2015 with July 2014, wholesale prices have risen 1.1%.

Manheim attributes this pricing strength to a number of factors: the retail used market is liquid, and dealers are shifting more units, enjoying greater efficiencies, and even F&I income is also inching up. Even though new vehicle prices are rising, dealers are not cutting back on incentive activity (both direct and indirect). So, it is probable that the new vehicle market has not impacted the wholesale market. However, global factors represented by exchange rate movements and shifting demand patterns may threaten the current wholesale pricing outlook.

Used vehicles: sales up, profits up…

According to Manheim, preliminary estimates indicate that July total used vehicle retail sales increased month-on-month. CPO transactions have been confirmed as increasing 11% on June, and up 12.3% since the start of the year.

The big 7 public dealer groups reported a 24th consecutive quarterly rise in like-for-like store retail used sales. On a sales-weighted basis, the gain was 6.9% – which is the most impressive since Q4, 2013, and comes in the face of tightening margins, and contributes to record profits.

Rental risk units – total auction prices continue to fall

July marked the fourth consecutive month that rental risk units (adjusted for broad shifts in class and mileage) edged downwards. On a 12 months basis, prices have slipped 4.3%. And taking unadjusted prices, the decline is much worse, clocking in at 11.7%, year on year. Hence, average price has fallen below $14,000 for the first time since October 2011.

Rental risk units continued to sell at auctions – volumes were up year on year, but were only in line with 2013 and 2012 levels. The rental sector continued to suck up new vehicles, although sales were only up less than 1% in July, exhibiting year-to-date gains of 5.9%.

Market segments – Pickups, SUVs, vans lead the way

Pickups, SUVs, CUVs and vans continue to be the stand-out performers, year-on-year. And in a surprising break from the recent trend, luxury cars have finally shown an uptick, but this comes against a back-drop of very weak pricing. Meanwhile compacts have continued to slide, and prices are 6.7% lower compared to July 2014.

Pickups, SUVs, CUVs, and vans continued to have higher prices year-over-year. Luxury cars were also up, but the comparison was against very historic pricing. Compact car prices were down 6.7% over the past year.

Meanwhile, commercially consigned and dealer-consigned units fetched more at auctions in July 2015 compared to July 2014. Pricing for dealer consigned units surprised to the upside by beating June’s prices – lower average mileage is the most likely explanation.

 

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    By Farra Majid, August 8, 2015

 

 

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Posted by: Farra Majid on Saturday, August 8th, 2015 at 4:22 pm in INDUSTRY