Manheim reported that wholesale values increased in the fourth quarter by nearly 2 percent to finish 2014 slightly higher than the previous year, as consumer demand for used models remained strong.

The movement left the Q4 reading of the Manheim Used Vehicle Value Index — a measure of wholesale prices adjusted for mix, mileage and season — at 123.9, a 1.8-percent uptick from a year ago and 2.1 percent higher than the third quarter.

Manheim chief economist Tom Webb explained on Thursday that an improving job market and attractive financing helped boost the retail market for new and used vehicles. Webb indicated the strongest demand for used vehicles in the fourth quarter was in the $13,000-to-$15,000 range, a higher sweet spot than a year ago.

As has been reported by Auto Remarketing, Webb also pointed out that sales of certified pre-owned vehicles hit record numbers in 2014.

“The used-vehicle market finished another solid year,” Webb said. “Consumers continue to see great value in purchasing used vehicles, even at higher price points. Dealers continue to see used vehicles as an important and profitable part of their business.”

Manheim determined that fourth quarter wholesale pricing for vehicle segments were as follows:

• Compact car prices were down 1.1 percent in December, compared to the same period last year, as Manheim noticed consumers moved to CUVs and midsize cars.

• Midsize cars had been one of the weaker segments during the year but Manheim noticed values end December 2.2 percent higher than the same period last year.

• Luxury car values fell 0.4 percent on a year-over-year basis, as analysts spotted these units holding their prices despite an increase in supply from off-lease vehicles.

• Pickups and vans remained the strongest segment, with pickups up 6.1 percent and vans up 3.1 percent on a year-over-year basis. Often purchased for business use, Manheim said demand for these vehicles has increased during the year.

• SUV and CUV also continued to be a popular segment, up 2.8 percent in December compared to the same period last year. Manheim said consumers have been moving to compact and midsize CUVs, which offer a balance of room and fuel efficiency.

With new-vehicle sales volumes expected to plateau, Webb emphasized the upcoming year will be critical for the auto industry. As long as automakers keep incentives low for new–model sales, Webb contends that used-vehicle values should remain stable.

“An incentive war, however, would lower new-car prices and also put pressure on dealers to lower used-car prices,” Webb said.

“The growth rate in the U.S. auto market is expected to slow down and level off in 2015,” he continued.

“The big question is whether automakers will be satisfied with their respective slice of the pie,” Webb went on to say. “If they aren’t satisfied and resort to heavy incentives, prices and profits will fall.”

Editor’s Note: More commentary and analysis from Webb’s quarterly conference call will be a part of Monday’s edition of Auto Remarketing Today.