Wholesale used-vehicle prices technically softened in January, marking only the second decline in the past eight months, to leave the Manheim Used Vehicle Value Index at 125.2 — virtually unchanged from a year ago.

But Cox Automotive chief economist Tom Webb pointed out that a straight average of all auction sales in January showed wholesale prices ticking up nearly 2 over the past year and moving almost 8 percent over the past three years.

Webb explained this over-performance relative to the Manheim Index reflects the movement upscale in the market class of vehicles being sold, and the shift toward more late-model, lower-mileage vehicles being offered in the wholesale market.

Turning back to the index data, Webb again offered more clarity about the January trends, which also showed prices for pickups jumping 8.5 percent while prices for compacts tumbling by 8.9 percent.

“Wholesale pricing for minivans has eased noticeably in recent months, but firm valuations for full-size cargo units kept the total van category up year-over-year in January,” Webb said about pricing for the segment nudging up 0.8 percent.

“Pickups, both midsize and full-size, remain the strongest segment in recent months and over the past year. Within the SUV/CUV category, full-size units have far outperformed the other subcategories,” he continued.

“In January, compact cars remained the weakest of the major categories, with a year-over-year decline of near 9 percent,” Webb went on to say. “Luxury cars — and all of the subcategories in that segment — have also underperformed the market over the past year.”

Webb acknowledged it has been long anticipated that wholesale values would ease in 2016 as a result of higher supply.

“We suspect the first downward movement of the year was more the result of past margin compression than growing wholesale volumes,” he said about the index reading that actually ticked 0.1 percent lower.

“Retail used-vehicle gross margins were not strong in the fourth quarter of last year, so it is only logical that dealers will moderate their bidding until such time as the risk-reward ratio comes back into better alignment,” Webb added.

January retail sales: Steady, but unspectacular

Rounding up to 17.6 million, Webb noted the seasonally adjusted annual selling rate for new vehicles in January once again “beat” expectations. But he added this achievement came with more than a single note of caution.

“January’s sales pace is always sensitive to the seasonal adjustment factor — one which this year was further complicated by the adjustment for two fewer selling days,” Webb said.

“Many think that even a one-day adjustment is a rather quaint notion that ignores reality and common business practices,” he continued.

On a three-month moving average basis, Webb calculated the new-model SAAR was 17.6 million in January versus a high of 18.1 million in November.

“In any event, one thing is clear: Adjusted or unadjusted, retail sales were down and incentive spending was up in January relative to a year ago,” Webb said.

Webb also mentioned total fleet purchases rose 14 percent in January with sales into rental up more than 13 percent, commercial deliveries up 9 percent, and government purchases up more than 30 percent.

The Cox Automotive economist went on to mention preliminary numbers suggest that total used vehicle sales were able to eke out a small gain in January (without the aid of a selling day adjustment). But as reported by Auto Remarketing, CPO sales in January declined 2.1 percent.

“Granted, there is no selling-day adjustment,” Webb said. “But even if there were, the resulting increase would be small compared to the large percent gains posted in each of the last three years.”

Update on rental risk pricing

Also of note in the latest Manheim index report, Webb mentioned prices of off-rental units remain steady.

In January, auction prices for rental risk units (adjusted for broad changes in mix and mileage) declined 0.6 percent from December and softened by 3.3 percent from a year ago.

“Overall, however, this price series has remained in a very narrow range for more than five years,” Webb said.

“Unadjusted prices set a new January high, based in part on a 7.6 percent decline in average mileage from a year ago,” he continued. “Auction volumes for rental risk units were down in January relative to last year.”