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January 2018 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Wholesale used vehicle prices started the year in the pattern that characterized much of 2017 in the months prior to hurricane season. Namely, car prices tended to fall while truck prices provided a boost to average wholesale values. In January, car prices continued to show year-over-year price declines, while truck prices did the opposite, but that situation is moving towards parity, as indicated by strong month-over-month increases in car prices.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in January averaged $10,980 – up 1.6% compared to December and up 0.3% relative to January 2017. Prices increased at a higher monthly rate for cars than trucks, but were down on an annual basis.

When holding constant for sale type, model-year age, mileage, and model class segment, prices were down on a year-over-year basis for both midsize cars and midsize SUV/CUVs, as seen in the following table:

 

 

 

As anticipated in last month’s Kommentary, the “lift” in wholesale prices from Hurricanes Harvey and Irma, particularly for trucks, is over.

Average wholesale prices for used vehicles remarketed by manufacturers were down 3.7% month-over-month but up 7.9% year-over-year. Prices for fleet/lease consignors were up 4.1% sequentially but down 0.3% annually. Average prices for dealer consignors were down 1.7% versus December and down 0.6% relative to January 2017.

January CPO sales were down 8.2% from the prior month, but up 5.3% 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 - January 2018
Wholesale Price Data by Model Class Segment History 2015-012018
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 - January 2018