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July 2015 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

For the third month in a row, average wholesale used vehicle prices fell significantly on a month-over-month basis, falling below $10,000 for the first time this year. Supply growth continues to put downward pressure on prices despite strong demand driven by relatively high levels of retail used vehicle sales, especially for certified pre-owned (CPO) vehicles.

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Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in July averaged $9,878 – down 3.3% compared to June, although up 1.4% relative to July 2014. Low fuel prices appear to be preferentially benefitting pickup truck values, which rose 2.2% month over month, while luxury car prices took a 9.6% month-over-month hit.

Average wholesale prices for used vehicles remarketed by manufacturers were down 10.2% month-over-month and 14.7% year-over-year, as prices for off-rental program vehicles continue to be negatively affected by abundant supply. (The same goes for off-rental risk vehicles.) Prices for fleet/lease consignors were up a modest 0.3% sequentially and down 0.2% annually. Dealer consignors saw a 7.6% price decrease versus June and a 1.9% decrease relative to July 2014.

Data from NADA showed an 11.6% year-over-year increase in used vehicle sales by franchised dealers and a 15.0% increase for independent dealers in July. CPO sales were up 4.2% month-over-month and 11.0% 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 - July 2015
Wholesale Price Data by Model Class Segment - Full History 2011 - 072015
ADESA Analytical Services Selected Model Class Segments
Wholesale Price Data by Model Class Segment - Full History 2000 - June 2012