ADESA Analytical Services has been busy for weeks completing a major revision of the vehicle model class segmentation system Tom Kontos and his team of analysts utilize.

On Wednesday, Kontos revealed ADESA’s new segmentation system; one he contends more accurately reflects current trends in vehicle model lineups. Kontos indicated that the major differences between the previous and revised classifications are:

—Greater inclusion of vehicles in the full-size car category.

“Previously, this segment only included traditional American large cars such as the Ford Crown Victoria, the Buick Lesabre and the Mercury Grand Marquis,” Kontos stated. “That segment had dwindled to very few units as these vehicles have gone out of production, and therefore average prices were quite volatile month to month.  

“The segment has now been expanded to include certain larger cars that previously were in the midsize category,” he continued.

—Reassignment of models to new crossover segments.

“The crossover segments have particular relevance in today’s market, and inclusion of these new segments represents a significant improvement in our reporting,” Kontos emphasized. “Many of the models re-categorized as crossovers were formerly classified as SUVs.

The company noted average prices based on the previous segmentation system, which will remain posted on ADESA.com, can still be used for historical trends in overall prices going back to January 2000.

“They are still relevant for broad trends at the segment level,” Kontos said. “We hope you find these improvements to our data useful.”

July and August Wholesale Price Analysis

Since it took time to reconfigure its methodology, ADESA revealed its July and August data on Wednesday.

According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, wholesale prices in August averaged $9,518 — down 0.4 percent compared to July and down 3.7 percent relative to August.

The company’s new segmentation analysis revealed that average prices for crossovers matched the market’s month-over-month drop in August (down 0.4 percent), but the compact CUV segment held up better (down just 0.1 percent).

Meanwhile, midsize and full-size CUVs softened by 0.5 percent.

Analysts pointed out prices for full-size cars had a strong month, rising 6.7 percent, but were nevertheless down from last year (off by 4.0 percent).

ADESA mentioned that prices for used vehicles remarketed by manufacturers fell by 1.7 percent and 4.4 percent month-over-month, respectively in July and August, although they remained 2.8 percent higher year-over-year in August.  

“The increasing rate of month-over-month decline may be an indication of continued downward price pressure on manufacturers’ vehicles as more off-rental vehicles began entering the market after Labor Day,” Kontos surmised.

Analysts found that fleet/lease consignors experienced a 1.3-percent sequential price decrease in July, but a modest 0.6-percent increase in August, leaving prices down 1.9 percent year-over-year in August.

The company added that dealer consignors saw a 3.5-percent average price decrease versus June and a 1.4-percent decrease versus July, resulting in prices being down 4.8 percent versus August of last year.

“Average wholesale used vehicle prices in July and August fell on both a month-over-month and year-over-year basis and continued the pattern of cyclical and seasonal softening we have been reporting for many months,” Kontos reiterated.

“Year-over-year price drops in average wholesale prices in the four percent range throughout the summer, combined with five consecutive month-over-month drops confirm that this is indeed a softening wholesale used-vehicle market,” he continued.

“Improving trade-in volume from several months of strong new-vehicle sales has franchised dealers less hungry for cars at auction and more prone to wholesale some units,” Kontos went on to say. “Both these dynamics, the former weakening auction demand and the latter increasing supply, are putting downward pressure on wholesale prices.

“Moreover, used-vehicle prices had been pushing up against new-car prices and had almost nowhere else to go but down. Still, late-model units remain in short supply, with dealers taking older, rougher trades as many consumers waited as long as they could to replace their vehicles after the recession,” he concluded.