Wholesale Used Vehicle Market Decline Continues in June

by: Karen Tanner-Smith, Director, OneMain Remarketing

Continuing the trend of the past few months, wholesale used vehicle prices at auction declined again in June.  According to the Manheim Market Index (adjusted for mix, model, and seasonality), average prices dropped 1.4% last month, the third consecutive monthly decline in auction prices.  Black Book reports that all 10 car segments have declined for 3 consecutive weeks while there have been 5 consecutive weeks of declines for the truck segments.

On a year over year basis, the segment most impacted is compact cars.  Several industry analysts indicated that falling gas prices are putting downward pressure on this segment causing prices to fall between 2-3%.    Additionally reports indicate that prices on off-rental units are between 4 to 5% lower than this time last year.

Even with the current price declines, the historical values on used vehicles are still near an all time high with continuing strong demand.  CNW Research noted that retail used vehicle sales dropped 2.5% from June 2011 but much of that decline was due to a disruption in new car supply at this time last year that forced consumers to purchase more used vehicles.  For the first half of 2012, total retail used vehicle sales are up 4.1% year over year.  Kelley Blue Book indicated that current values of 1-3 year old used vehicles are approximately 20% higher than prices in 2009.

One factor bolstering used vehicle prices is the tight supply in the wholesale marketplace.  2012 has seen limited volume available for purchase at auction and this trend is expected to continue through the rest of the year.  ADESA economist Tom Kontos expects supply to increase in 2013 as more off-lease volume is sent to auction and also suggests an increase in repossession units would not be a surprise.

Even with the recent decline in prices, the current market is very strong for used vehicle sellers.  Available supply is limited, retail demand is strong, and prices remain near historical high points.

This article is provided by Karen Tanner-Smith.  Karen is a 15 year industry veteran and currently serves as the Director for OneMain Remarketing, an industry leading provider of used vehicle remarketing services for credit unions, banks, and other financial institutions.

Karen Tanner-Smith

Karen Tanner-Smith

From 2000 to 2010 Karen Tanner-Smith served as the Senior Vice President for CitiFinancial Auto where she was responsible for leading Remarketing, Recovery, and Collections. An 18 year industry veteran ... Web: www.citi.com Details