Kentucky’s men’s basketball team just won the most recent of its eight NCAA national championships the last time used-vehicle values rose to the level Manheim determined as the January reading.

Manheim reported that wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased in January for the fourth consecutive month. This movement pushed the January Manheim Used Vehicle Value Index to a reading of 125.3, which represented an increase of 2.5 percent from a year ago.

Chief economist Tom Webb indicated January’s price rise pushed used-vehicle values to their highest level since April 2012. (And for reference for the wholesale observers who follow college basketball, Kentucky defeated Kansas at the start of that month for the national title.)

“The fact that wholesale prices are now back to a level last seen when off-lease volumes were at their trough is contrary to expectations of most analysts,” Webb said. “Wholesale prices are not, however, in conflict with the continued rise in new-vehicle transaction prices (net of incentives) or the strong retail used-vehicle results being reported by most dealers.”

Looking at the six vehicle categories Manheim tracks monthly for this report, only one registered a price decline. And it was just a 0.5-percent softening for compact cars, but the small movement still drew a reaction from Webb.

“Wholesale pricing for compact cars was weak in January. That has been the trend for more than a year as a result of competitive pricing on the new vehicle side and abundant offerings in the wholesale market,” he said. “The pricing pressure in this segment has only been intensified by the plunge in gas prices.”

Prices for the remaining five segments all moved higher, including:

— Midsize cars: up 1.4 percent
— Luxury cars: up 1.6 percent
— Pickups: up 8.2 percent
— SUV/CUV: up 2.9 percent
— Vans: up 3.0 percent

“In January, relative pricing strength across price tiers was extremely consistent and seemingly uninfluenced by shifting volumes for the various price points,” Webb said. “This suggests an efficient market that has erased earlier price anomalies through the competitive bid process.”

Elsewhere within the wholesale landscape, Manheim noticed auction prices for dealer-consigned units sold in January were “noticeably higher” than a year ago.

Webb attributed the trend to growing volumes and slightly rising mileage.

Manheim also mentioned pricing for rental risk units held steady last month.

“Auction prices for rental risk units sold in January rose relative to December after adjusting for mix and mileage, but were down absent the adjustment,” Webb said.

“Adjusted prices were basically level with a year ago. Average mileage on units sold in January remained at the record high level posted in December,” he went on to say.

New- and Used-Vehicle Sales Commentary

Beginning with a look at turning new metal, Webb described new-vehicle sales and pricing being “on track” to start 2015.

Manheim reported new cars and light-duty trucks sold at a seasonally adjusted annual rate of 16.7 million in January.

“More than a handful of makes had their best January ever,” Webb said.

Webb referenced a Kelley Blue Book report that stated average transaction prices in January climbed 5 percent from a year ago, driven in part by mix shifts.

“Even the government’s new vehicle component of the Consumer Price Index, which is mix- and quality-adjusted, remains up year over year,” Webb said. “As a result, although wholesale values relative to the New Vehicle CPI are elevated (on both a lagged and current basis), they are not outside of historic norms.”

Turning back to the used market, Webb pointed out that used-vehicle sales and profits remain strong.

In January, dealer sales of used vehicles rose 1.4 percent, according to CNW Research, while Autodata Corp. highlighted that certified pre-owned sales jumped 17 percent to begin the year.

“That was after both publicly traded and private dealer groups indicated strong used vehicle operations in the fourth quarter. Volumes were up with no sacrifice to gross or turn rates,” Webb said.

The Manheim economist then elaborated about what the result might be when final numbers for the seven publicly traded dealerships are reported later this month.

“It is almost inevitable that fourth-quarter same-store used unit retail volumes will show a rise for the 22nd consecutive quarter,” Webb said. “And it is possible that gross margins held steady after several years of decline.

“We expect that labor market and credit conditions will continue to be favorable for used unit sales for the remainder of 2015,” he continued. “Maintaining margin, however, will require superior inventory management in the face of what may be volatile industry conditions and easing wholesale values.”