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June 2015 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Average wholesale used vehicle prices fell significantly again in June relative to May, though they remained higher than year-ago levels. Besides seasonal factors, supply growth is continuing to put downward pressure on prices, though this impact remains somewhat masked by a “richer mix” of higher-priced off-rental manufacturers program vehicles and off-lease units discussed in previous commentaries.

Used vehicle retail sales were at relatively high levels, though down a bit from May.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in June averaged $10,192 – down 2.5% compared to May, but up 2.4% relative to June 2014. Increased supplies of compact cars played a role in softer prices for those vehicles in June. The SUV model classes also saw some correction in prices during the month, though prices remain high for SUVs on a year-over-year basis, as the fuel price environment has been favorable to larger vehicles.

Average wholesale prices for used vehicles remarketed by manufacturers were up 0.3% month-over-month but down 6.9% year-over-year, as off-rental program vehicles continue to be in high abundance. Prices for fleet/lease consignors were down 2.6% sequentially and down 1.5% annually. Rental risk vehicles were partly to blame here, as a large number of older, rougher, high-mileage units were de-fleeted. Dealer consignors also saw a 2.6% price decrease versus May, but enjoyed a 2.7% increase relative to June 2014.

Data from NADA showed a 2.5% year-over-year increase in used vehicle sales by franchised dealers and a 3.6% increase for independent dealers in June. CPO sales were down 8.4% month-over-month from last month’s record sales, but up 17.6% year-over-year, according to figures from Autodata.

1 The analysis is based on over six million annual sales transactions from over 150 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. ADESA Analytical Services segregates these transactions to study trends by vehicle model class.

The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to KAR Auction Services, Inc. The views and analysis are not the views of KAR Auction Services, its management or its subsidiaries; and their accuracy is not warranted. The statements contained in this report and statements that the company may make orally in connection with this report that are not historical facts are forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “bode”, “promises”, “likely to” and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the company’s Securities and Exchange Commission filings. The company does not undertake any obligation to update any forward-looking statements.

Wholesale Price Data by Model Class Segment - June 2015
Wholesale Price Data by Model Class Segment - Full History 2011 - 062015
ADESA Analytical Services Selected Model Class Segments
Wholesale Price Data by Model Class Segment - Full History 2000 - June 2012