Used Wholesale Prices Drop to 3-Year Low

IRVINE, Calif. - 

Kelley Blue Book has reported that used-car auction values have reached a three-year low. After the 2008 recession and the consequential drop in off-lease supply, news like this has been a long time coming for dealers.

In fact, KBB senior market analyst for automotive insights Alec Gutierrez said, “This year started at a three-year high, but with no strong appreciation in Q1, auction values began an early decline in April and since have declined below levels seen in 2012 and 2011.”

But since there have been lulls in the strength of auction prices before during the past few years only to rise again, Gutierrez offered some good news for dealers regarding the rest of 2013.

“We expect this depreciation to continue through the remainder of the year, with year-end values no more than 3 to 5 percent below where they ended in 2012,” he said.

And as we approach June, only a few segments “are maintaining a positive value for the year,” KBB shared.

First, since the housing market is improving and construction is on the rise, midsize pickup trucks are a bit pricier in the lanes, Gutierrez reported. This segment saw a 2.2-percent increase in auction prices this month.

Also, as a seasonal trend and summer approaches, the sports car segment “remains ahead of the curve” for auction prices, rising by 2.9 percent in May.

The warmer weather is “making coupes and convertibles more attractive to summer buyers,” Gutierrez said.

As 2013 got underway, gas prices were high, and consumers were bracing themselves for rates of $4 per gallon and higher.

But now, the tides have turned.

“Hybrid vehicles have fallen the most year-to-date, with a nearly 9 percent decline from where the segment started in January,” Gutierrez said. “This drop can be attributed to the fairly stable fuel prices seen in the first quarter.”

Hybrid prices have dropped 8.9 percent this month as gas prices stabilize.

Editor's Note: For more analysis on May auction price trends, see Monday’s Auto Remarketing Today e-newsletter.

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