Manheim Index Starts 2013 with Modest Decline in January

The first Manheim Used Vehicle Value Index reading of 2013 represented a 1.8-percent decline from a year ago, settling at 123.4.

As a result, wholesale prices (on a mix-, mileage-, and seasonally adjusted basis) fell by 0.6 percent in January. Manheim said that absent the seasonal adjustment, the decline in vehicle values was half that amount.

“It was well-anticipated that wholesale values would retreat somewhat at the beginning of 2013, given that Hurricane Sandy’s impact on the wholesale market would be waning and that auction supplies from commercial consignors would be rising,” Manheim chief economist Tom Webb said.

“Continued strength in the retail market, however, kept the decline in wholesale prices modest, for now,” Webb continued.

Only one vehicle segment Manheim track in conjunction with its index reading moved higher year-over-year in January. Prices for pickups ticked up 1.1 percent.

Meanwhile, prices for the other five categories all dropped. Those year-over-year declines included:

—Compact cars: down 1.9 percent
—Midsize cars: down 1.0 percent
—Luxury cars: down 2.0 percent
—SUVs and crossovers: down 1.3 percent
—Vans: down 1.3 percent

As prices begin to soften, Manheim is noticing the composition of auction sales are beginning to shift.

“With commercial consignment volumes set to rise in 2013 — after a steep decline over that past four years — it was known that the mix of auction sales would shift back toward late-model, more expensive units,” Webb said.

“That shift was evident in January with vehicles in the $25,000 to $30,000 price range showing the biggest percentage increase in volume relative to last year,” he continued. “Vehicles in the $9,000 to $11,000 price range had the biggest drop in volume and, consequently, enjoyed strong pricing.”

Meanwhile, Webb pointed out that prices of off-rental units remain strong.

“If one uses off-rental units as the sample set, then the fear that rising auction supplies will destroy residual values is probably overblown,” Webb said.

“In January, prices for off-rental risk units sold at auction were up on both a year-over-year and sequential basis, despite significantly higher volumes. And, that volume increase was relative to very high levels last January,” he went on to say.

Manheim indicated new-vehicle sales into rental fleets in January rose less than 4 percent, “which suggests there was some de-fleeting in January that normally would have occurred in December, absent the impact of Hurricane Sandy,” according to Webb.

Next, Webb recapped how new- and used-vehicle sales started in 2013.

New vehicles sold at a seasonally adjusted annual rate of 15.2 million in January, which was similar to the pace achieved in the fourth quarter of 2012 and only slightly lower than the full year 2013 forecast of 15.3 million to 15.6 million.

Furthermore, CNW Research noted used-vehicle retail sales at dealerships jumped 16 percent last month.