Fueled by a double-digit jump in pickup prices, Manheim noticed wholesale prices (on a mix-, mileage- and seasonally adjusted basis) increased for the third consecutive month in August.

As a result of five of the six major vehicle segments moving higher, the Manheim Used Vehicle Value Index moved up to a reading of 124.3, representing an increase of 2.1 percent from a year ago.

Drilling deeper into the August data showed a 10.1-percent lift in pickup prices, followed not far behind by prices for vans, which shot up by 6.7 percent year-over-year.

The other three segments to tick higher last months included CUVs and SUVs (up 2.4 percent), midsize cars (up 1.9 percent), and luxury cars (up 0.1 percent).

Perhaps the overall price increase might have been higher had it not been for the softening of compact car prices, which declined by 6.7 percent from a year earlier.

“Pickups, SUVs, CUVs and vans continued to have higher prices year-over-year. Midsize and luxury cars were also up, but the comparison was against weak year-ago pricing,” Cox Automotive chief economist Tom Webb said in his commentary included with the latest index update. “Compact car prices are down 6.7 percent over the past year.

“A straight average of auction pricing was up year-over-year for both commercially consigned and dealer-consigned units. The average mileage on dealer-consigned units continued to track slightly below its year-ago level,” he continued.

After touching on the specific vehicle segments, Webb offered some color on how wholesale price movements fit in with other economic developments happening in the U.S. and elsewhere.

“The stability of wholesale pricing, in the face of rising volumes, stands in stark — and welcome — contrast to the volatility in financial markets. It should not, however, come as a surprise,” Webb said. “The reverberations of international events will not be felt in the used-vehicle market unless and until actual fissures develop in our domestic economy.

“Such a reversal of fortune is a definite possibility, but it would likely require an additional buffering by those outside forces as well as policy mistakes on our part,” he added.

Rental risk pricing update

Manheim noticed a straight average of auction prices for rental risk units bumped up from July’s low, but remained below 2013 and 2014 levels.

Webb also pointed out the average mileage on rental risk units fell to its lowest level since October of last year. He said auction volumes were down in August after being up “significantly” in the first seven months of the year.

In August, Manheim said, new-vehicle sales into rental fleets declined 3 percent, but were still up 5 percent year-to-date.

More details about the volume-price relationship

Webb acknowledged that higher wholesale volumes naturally drive prices lower with all other potential factors being equal.

“And, naturally, all other things are never equal,” Webb said. “As evidence, note that a simple regression of adjusted prices as a function of wholesale volume returns no statistically significant results.

“Adding in additional explanatory variables to capture labor market and credit conditions gives the volume variable a statistically significant negative coefficient; but it is not particularly strong, and the residual errors in the equations remain large,” he continued.

Examination of credit impact

Webb explained one of the problems in developing statistical models of future pricing is the difficulty of quantifying the availability of credit, as opposed to its cost.

“And clearly, availability is the more important of the two,” Webb said.

In past cycles, Webb indicated credit spreads could sometimes be used as a rough proxy for availability.

“But our protracted period of near-zero interest rates has left the yield curve devoid of any historical perspective,” Webb said. “Note, for example, that the percentage point spread between the 10-year and two-year Treasury note (monthly average) has been at least 125 basis points since January 2008.

“The spread reached half-century highs during the recovery and even now stands around 150 basis points. Even when the Fed begins it rate hikes, the spread will remain elevated — it may even widen,” he continued. “Chances of an inverted yield curve providing a heads up to the next recession? Slim.”

Final thoughts

Webb closed his latest index commentary but maintaining the market is approaching the time of the season for prices to fall. “Statistically speaking,” Webb reiterated the largest seasonal decline in mix- and mileage-adjusted prices occurs between September and November.

“Over the past decade, the seasonal impact has averaged an additional percentage point of depreciation in each of the three months,” he said. “This year, along with the international issues (which will likely remain turbulent), our budget and debt ceiling ‘debates’ will add uncertainty to the market.”