IRVINE, Calif. -

Dealers are used to seeing an uptick in auction prices come spring, but this year, prices stayed relatively flat. Why?

Kelley Blue Book’s Alec Gutierrez said this flatness can be attributed to “mild fuel prices and increased supply.”

In fact, wholesale values increased only 2 percent in the first quarter, said Gutierrez, who is the senior market analyst of automotive insights at KBB.

Last year, wholesale prices rose by 3 percent during the same period, and jumped up 6 percent in 2011.

And in a “Beggs on the Used Car Market” video report released in early May, Black Book’s Ricky Beggs asked, “Is the spring market over?

During the first week in May, car prices in the lanes had already begun to soften, with no car segments experiencing increases, and only one segment had a single digit decline: the entry sporty cars (which fell $9).

Overall, the car segments during the first week in May fell by an average of $39, which at the time marked the largest declining level since the week ending Feb 1.

Beggs explained in that report this may be a sign of the end of the spring market — a little earlier than expected.

And as May kicked off, NADA Used Car Guide reported continued weakening in wholesale price movement.

Through its AuctionNet data, NADA UCG found that wholesale prices peaked in March this year, and experienced mild declines through April and into May.

When May kicked off, NADA UCG was predicting small auction price declines throughout the month.

Why Such a Short Spring Market?

As for the reasons for the downtrend, used supply is finally loosening, which is definitely playing a part in unseasonably low wholesale rates. And the current situation at the gas pumps may be helping, as well.

“Although values have eased as supply has improved due to slight increases in off-lease units in recent months, recently cheaper gas is helping to keep values in check so far this year,” Gutierrez said in April’s Blue Book Used Car Market Report.

“Gas prices currently are more than $0.30 per gallon less than they were at this time last year and continue to fall.”

Not only did these factors keep spring wholesale price upticks at bay, they also brought prices down quicker, as prices at auction began to fall as April got underway — “the peak came approximately two weeks earlier this year than in 2013, and more than a month earlier than in 2011,” Gutierrez said.

Overall, used-vehicle values were down in nearly every segment in April, with the average used-vehicle selling approximately 1.7 percent below prices paid at this time last year for similarly aged vehicles, Gutierrez reported.

Interestingly, as gas prices fell, hybrid prices declined the most at auction, with values more than 12 percent below last year’s levels.

“Values of used hybrids have been kept low by cheaper gas prices and attractive finance officers on new hybrid models,” Gutierrez said.

And though auction prices for the small-car segments are up slightly on a year-to-date basis, prices are on the way down, according to KBB.

Gutierrez explained early this month that after spiking in March, as “gas prices continue to tumble, Kelley Blue Book expects further declines across the small-car segment.”

(This commentary was given in early May. The past couple weeks have shown gas prices are rising once again. Stay tuned to Auto Remarketing to see how this trend will affect the wholesale market)

Where Wholesale Prices Will Land

So, what were analysts expecting to be in store for the current quarter?

“Kelley Blue Book believes used-vehicle values likely will decline between 1 to 3 percent in the second quarter, and will continue to drop modestly throughout the rest of 2013,” Gutierrez said.

He went on to note that expectations are for the industry to end the year with much lower auction prices than seen in 2012.

“Due to improving supply conditions at auction, attractive new vehicle finance offers and cheaper gas prices, Kelley Blue Book expects used-car values to remain down year-over-year, likely ending the year 3 to 5 percent below prices paid in 2012,” Gutierrez concluded.  

Editor's Note: This story ran in the June 1–15 issue of Auto Remarketing, which featured our Used-Car Progress Report. Check out the issue for more on auction prices, off-lease supply and more.