Not since Hurricane Sandy rocked the Northeast has the Manheim Used Vehicle Value Index jumped this much in a single month.

Manheim determined wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) rose for the third consecutive month in August, pushing the index to 122.3. The reading represents an increase of 1.3 percent from its year-ago level.

“The August increase in wholesale prices was the largest since the jump at the end of last year due to the impact of Hurricane Sandy,” Manheim chief economist Tom Webb said. “The drivers of today’s strong wholesale pricing are more positive — low inventories and higher transaction prices in the new vehicle market and strong profit opportunities in the retail used-vehicle market.”

As has been discussed by numerous wholesale price observers, Manheim noticed a robust price increase for pickups in August. The company pinpointed the price gain for pickups at 3.8 percent, more than double the amount of the three vehicles segments that posted price upticks combined.

The other three vehicles segments that increased in price during August according to Manheim included SUVs and CUVs (up 1.2 percent), vans (up 0.1 percent) and luxury cars (up 0.1 percent).

Prices for midsize cars barely edged lower as Manheim indicated their dipped by just 0.1 percent while prices for compacts dropped more at 0.8 percent.

“Mileage-adjusted prices for midsize cars are basically flat relative to a year ago but in recent months, their seasonally adjusted prices have improved significantly — and, in fact, outperformed the overall market,” Webb said.

“In the first half of this year, wholesale pricing for midsize cars was being hurt by the competitive offerings and price discounting in the new-vehicle market,” he continued.

“In recent months, new-vehicle pricing in this segment has been rising since that is where several inventory shortages reside. As a result, seasonally adjusted wholesale prices for late-model midsize cars have risen,” Webb went on to say.

Pricing for Rental Risk Units Remains Steady

Manheim mentioned average auction prices for rental risk vehicles (adjusted for mileage and broad changes in mix) changed little in August relative to July. On a year-over-year basis, prices moved up by just 1.4 percent.

“Again, pricing strength in the new-vehicle market helped these late-model used units,” Webb said. “The average mileage of rental risk units sold at auction in August was down relative to the past few years.”

Recap of August Sales Performances

Webb finished up his index report by going over how used- and new-vehicle sales settled in August.

Total used-vehicle retail unit volumes rose 5.6 percent in August with dealer sales climbing 4.7 percent, according to CNW Research. Webb pointed out this performance put year-to-date sales 3 percent for both the total and dealer sales.

“Channel checks suggest that the ever-present squeeze on both front-end and back-end gross margins is being more than offset by higher volumes, faster turns and increased productivity,” Webb said.

Meanwhile, Webb recounted that the new-vehicle sales pace topped 16 million in August.

“New-vehicle inventory (both the actual number and days’ supply) has always been a key determinant of late-model used-vehicle prices. August was no exception,” Webb said. “Dealers started the month with low inventories for several key models, and with August’s sales pace exceeding expectations, the days’ supply fell even further. That led to higher new-vehicle transaction prices and strong wholesale used-vehicle values.

“August’s sales rate was likely influenced by a seasonal adjustment factor that failed to fully capture the impact of the early Labor Day, but there is no denying the new-vehicle market is very robust,” Webb continued.

“And, importantly, manufacturers are content enough with today’s sales rate not to artificially push it even higher,” he went on to say.

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