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June 2017 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Average wholesale prices in June were down versus May but up on a year-over-year basis. However, drilling down into the data once again clearly reveals price softening on a year-over-year basis when accounting for sale type, vehicle age, model class and mileage.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in June averaged $11,067 -- down 0.7% compared to May and up 4.7% relative to June 2016. Compact and fullsize pickup trucks and minivans showed significant average price gains for the month, while most other model classes registered month-over-month declines or modest increases. (Note: the year-over-year growth in minivan prices is exaggerated by newer models as discussed in January’s report.)

Average wholesale prices for used vehicles remarketed by manufacturers were down 1.0% month-over-month and down 1.9% year-over-year. Prices for fleet/lease consignors were down 1.1% sequentially and up 3.2% annually. Average prices for dealer consignors were up 0.9% versus May and up 7.7% relative to June 2016.

Price softening continues to be evident when holding constant for sale type, model-year age, mileage, and model class segment:

 Fleet/Lease Sales of Three-MY-Old Units w/36K-45K Miles  
                                           Average Prices         Y/Y   Var

Model Class      Jun-17       Jun-16         $        %   

Midsize Car      $11,474       $11,990    ($515)   -4.3

  Midsize SUV/CUV     $19,723       $20,532    ($809)    -3.9


As the table shows, average prices for both of these two bellwether car and truck segments were down by about four percent year-over-year, reflecting growth in off-lease supply.

June CPO sales were down 6.6% month-over-month and 0.8% year-over-year according to figures from Autodata, but remain up 1.2% on a year-to-date basis.

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 2017
Wholesale Price Data by Model Class Segment History 2015-062017
Wholesale Price Data by Model Class Segment - Full History 2011 - 012016
ADESA Analytical Services Selected Model Class Segments
Wholesale Price Data by Model Class Segment - Full History 2000 - June 2012

Kontos Kommentary - June 2017