Current Used Vehicle Market Conditions and Outlook

Summary

Wholesale used vehicle prices continued to soften in July from their record highs in April. Yet, tight supplies kept prices relatively high even as they followed their typical pattern of weakening during the summer.

Generally weak used retail sales in July limited dealer needs to replace inventory, which reduced demand in auction lanes and online. Retail sales of certified used vehicles were strong, however and this bodes well for wholesale demand for late-model used vehicles.

Similar trends are expected for August, as we approach the fall defleeting season that typically hits stride primarily in September and October. Remarketers would be well advised to get ahead of that influx in supply and the softening price environment by selling sooner rather than later. The additional availability of desired vehicles will likely be appreciated by dealers whose inventories are still lean and who have to work extra hard these days to find units that fit their market needs.

Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class¹, wholesale used vehicle prices in July averaged $10,060 – down 2.2% from June and up 0.4% versus prior year. Prices for fullsize SUVs, which have had a strong run-up since their collapse in 2008 when gas went above $4.00 nationally, took a hit in July, though they were still well above year-ago levels. Minivans and mini SUVs, the latter of which includes crossover models, were the only model class segments that showed month-over-month price increases, and these increases were modest (0.3% and 0.2%, respectively).

Manufacturers registered a 3.6% month-over-month price decrease and a 13.2% year-over-year rise; fleet/lease consignors experienced a 0.3% sequential price decrease and a 3.6% annual increase; and dealers saw a 0.5% average price increase versus June and a 6.3% uptick versus July 2009.

ADESA Analytical Services estimates that auction industry inventory levels stood at 29 days at month-end compared to 33 days last July – continuing to indicate tight supply and high auction throughput.

Based on data from CNW Marketing/Research, retail used vehicle sales in July were down 0.1% year-over-year for franchised dealers, but up 19.3% for independent dealers, leaving total retail volume up 9.0%. On a month-over-month basis, however, retail sales of used vehicles were down for both franchised (down 10.2%) and independent (down 12.3%) dealers (and down 11.3% combined). Certified used vehicle sales in June were up 11.2% versus June and 19.1% compared to July 2009, according to Autodata. The consumer price index for used vehicles rose by 16.1% year-over-year in June (latest available) based on data from the Bureau of Labor Statistics.