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September 2014 Wholesale Used Car Values Trend Report

Wholesale prices: the decline continues

 

The decline in wholesale prices shows no signs of slowing. According to research by Manheim*, wholesale used vehicle prices declined 0.3% in September: the fifth month in a row that prices have declined. As a result, Manheim’s used vehicle index is now 1.1% down from a year ago.

Unseasonably high new vehicle sales appear in August to have been supported by consumers turning in their used cars, leading to a wholesale oversupply. But demand was there for dealers who were able to price their inventory at the market clearing rate. Independent dealers in particular have used favourable wholesale prices to stock up, and sell on to consumers.

Consumers increasingly favour leasing

New leases are up by 15%. This is welcome news for the auto industry, as with growing numbers of 72 and 84 month leases, there were concerns of a slowing turn cycle.

Retail used vehicle sales back on the up

In August, used vehicle sales took a pounding and declined 9%. But they rebounded strongly in September by nearly 5% according to data released by CNW. Strong new vehicle sales in August likely resulted in diverting some buyers from used vehicles. But the build-up of used inventory was retailed in September. Manheim reports that franchised dealer used vehicle retail sales were up 6.6% in September after being down 5.6% in August. CPO sales were up 20% in September and 10% year-to-date. Independent dealers have also been getting in on the act by adding 2.4% to more stock to their inventories.  

Decline in rental risk units reflects wider market fall

Auction prices for rental risk units have now declined for the last five months in a row. As a result average auction prices for rental risk units are down 4.5% (adjusted for mix and mileage) from a year ago.

Pickups now joined by vans!

Pickups and vans are the standout performers for price retention year-on-year. Although the price softening of used luxury cars appears to be slowing – meaning good news for lessors of shortly to be returned used units.

We noted that in the weakest relative price performance was in the $9,000 to $10,000 range. Not surprisingly the segment also had the highest year-on-year supply increase. However, falling gas prices may enable households to move back in to this segment and increase their purchases.

Posted by: Farra Majid on Tuesday, October 7th, 2014 at 7:52 pm in DEALERS, NEWS