The past four years have been the “longest stretch of wholesale price stability” in the two-decade history of the Manheim Used Vehicle Value Index, Cox Automotive chief economist Tom Webb said in his quarterly conference call Friday morning.

“And that’s a good thing, because precious few in this industry benefit from volatility in used-vehicle pricing,” Webb said.

In fact, each year beginning with 2012 showed wholesale price changes of less than 2 percent (positive or negative), Webb pointed out.

The Manheim index was up 1.2 percent on annual average basis for full-year 2015, Webb said, following a 1.5-percent gain in 2014, a 1.8-percent decline in 2013 and a 1.0-percent dip in 2012.

Macro-economic and industry conditions have played a role in that stability, but it’s important to note the “better, efficient remarketing practices, which have enabled our commercial consignors to anticipate, respond to and thus minimize impending swings in wholesale pricing,” Webb said.

But how long will this stability last?

“I think this year is setting up well. Generally speaking, you’re going to get that volatility more along the lines of changes in the macro-economic conditions or the retail environment, most notably credit. It would appear to me that 2016 still looks favorable from that standpoint,” Webb said. “Getting out beyond that, it would be logical to assume that we get a little more volatility back into the market.”

Prices in the used-car market remain at a high level. The index (on a mix-, mileage- and seasonally adjusted basis) reached 125.7 in December, which was up 1.5 percent year-over-year. Webb points out that this marks the sixth time in seven months the index has increased, pushing it to its strongest mark nearly four-and-a-half years.

But consider this, he said. There is a slide in his quarterly presentation (page 6 here) using Manheim Consulting/Bureau of Labor Statistics that shows how wholesale prices compare to the new-vehicle consumer price index.

“The takeaway here is that, yes, used-vehicle pricing is strong, but it is not outside of historic norms, given structural norms in the industry,” Webb said.

Also, strong used prices aren't outside or immune to possibly challenging conditions. 

One of the more pressing issues the wholesale market will continue to face this year and beyond is the off-lease volume.

After reaching about 2.5 million in 2015, Manheim Consulting data estimates there will be more than 3 million off-lease units to hit the wholesale market this year, with more than 3.5 million in 2017, before approaching 4 million in 2018.

“I was the optimist last year with respect to wholesale pricing, and I think my 2016 outlook is also better than most,” Webb said. “But let’s not kid ourselves: 4 million in ’18 will be a challenge, even under the most optimistic economic scenarios.”