Manheim chief economist Tom Webb determined wholesale used vehicle values declined by a little more than 2 percent in the third quarter, stating the market showed signs of returning to more normal levels after historically high prices earlier in the year.

As a result, the Manheim Used Vehicle Value Index — a measure of wholesale prices adjusted for mix, mileage and season — ended the third quarter at 121.4, a decline of 1.1 percent compared to a year ago.             

After posting increases over the winter and early spring, Manheim indicated that used-vehicle prices fell for five straight months through September. Webb pointed out a boom in new-vehicle sales during the quarter resulted in more trade-ins and lease turn-ins in the quarter, which led to an increase in inventories and put downward pressure on prices.

The price declines, however, took place as the market showed positive signs, according to Webb, who mentioned four elements in particular:

—  Loan delinquencies and repossessions remained low.

— Certified pre-owned sales increased 20 percent in September, and showed a 10 percent rise year-to-date.

— New-model lease penetration rates went up.

Webb explained the CPO sales rise proves that consumers are showing a strong demand for quality, late-model used vehicles while the leasing trends also are a sign of satisfied customers.

The Manheim chief economist, who will be a part of the large contingent of speakers at Used Car Week, pointed out that dealers also closed out the quarter with higher retail unit sales in September, moving more vehicles as prices fell.

“The decline in prices so far appears to be part of a healthy overall market,” Webb said. “Valuation adjustments enabled dealers not only to retail the large number of customer trade-ins and lease returns, but also actively purchase from the growing supply of late-model vehicles available at auction. Dealers were able to turn their inventory more quickly because of the lower wholesale prices.”

Manheim determined third-quarter wholesale pricing for vehicle segments included:

• Compact cars continued to be the weakest segment with prices ending the quarter down 3.4 percent compared to a year ago.

• Midsize cars matched the overall market and experienced a 1.1 percent decline in values compared to a year ago.

• Luxury cars fell 3 percent compared to a year ago. The multi-year decline in luxury cars appeared to be slowing in September.

• Pickups and vans remained the strongest segment with prices up 6.5 percent for pick-ups and 1.5 percent for vans. Owners in this segment tend to hold onto their vehicles for longer than the average, keeping supplies tighter even as the overall market increases.

• SUV and CUV prices were down 1.5 percent to end the quarter compared to a year ago. Normally one of the stronger segments, SUV and CUV prices fell in-line with the overall market.

Webb projected prices likely will continue to moderate during the rest of the year. However, he conceded that volumes should not increase as dramatically with new-vehilce sales returning to more typical levels.

Webb said the automotive sector was among the first segments to grow with the economic recovery and may show less up-side for the rest of the year.

“Although economic forces suggest that the retail consumer sector will improve in the months ahead, it is likely that the auto industry will plateau given that it got out ahead of, and then ran considerably faster than, the overall recovery,” Webb said.

“We should see a return to more normal prices and volumes across the entire industry,” he added.

Editor’s Note: More industry analysis originating from Webb’s quarterly conference call will be posted later this week by Auto Remarketing and SubPrime Auto Finance News.