As the wholesale price experts from KAR Auction Services and J.D. Power Valuation Services saw December metrics move in similar different directions to close 2018, they also agree that prices are likely to dip somewhat as this year continues.
According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, prices in December averaged $10,620 — up a modest 0.2 percent compared to November and down 1.7 percent relative to December of 2017.
KAR Auction Services chief economist Tom Kontos explained that on average, truck prices softened more than car prices, which were up significantly versus November, though down year-over-year.
“Average wholesale prices in December fell on a year-over-year basis for the second month in a row and for the seventh time in 2018, supporting our expectation of general price softening due to supply growth,” he continued in his latest edition of the Kontos Kommentary.
“Supply growth is increasingly concentrated in the truck segments, which consequently saw greater price softening in December than did cars,” Kontos continued. “On a month-over-month basis, rising car prices more than offset declining truck prices, allowing a modest increase in overall wholesale prices.
“Auction prices for off-lease units were another major bright spot, as upstream remarketing continues to be effective in distributing supply across multiple channels,” he went on to say, while elaborating more in a video that’s available here.
Kontos also dissected wholesale price movements of midsize cars and midsize SUV/CUVs that are 3 years old with less than 45,000 miles. Typically characterized as off-lease units, he pointed out that prices were up significantly on a year-over-year basis for both categories when holding constant for sale type, model-year age, mileage and model class segment.
Prices for those particular cars rose $596 or 5.7 percent to $10,985, while prices for those specific utilities climbed $1,488 or 8.6 percent to $18,855 in December as compared to a year earlier.
Kontos wrapped up his last analysis of 2018 data by noting average wholesale prices for used vehicles remarketed by manufacturers declined 4.5 percent month-over-month and 4.0 percent year-over-year.
He determined December prices for fleet/lease consignors edged 0.4 percent lower sequentially but ticked up 6.2 percent annually.
Furthermore, Kontos added that average prices for dealer consignors in December were down 0.4 percent versus November and down 2.2 percent relative to the same month in 2017.
Analysis from J.D. Power Valuation Services
Meanwhile the team at J.D. Power Valuation Services shared their December wholesale price data, too, noting a decline for the fourth consecutive month to close 2018, what analysts described as a “typical” result.
Contained in the most recent edition of Guidelines, the J.D. Power Valuation Services’ Seasonally Adjusted Used Vehicle Price Index declined by 0.4 points in December on a sequential basis to land at 119.6. Despite the downward streak to close the year, analysts pointed out the index reading finished at the highest point since 2016.
All told in 2018, J.D. Power Valuation Services calculated wholesale prices rose 2.9 percent compared to 2017 information; a “healthy” gain driven by what analysts noted as the mainstream portion of the market.
Analysts determined prices for compact cars finished 2018 about 9 percent higher than the prior year while prices for midsize cars climbed by 7 percent.
An increase in supply kept prices for utilities from climbing at the same rates, but J.D. Power Valuation Services found they still rose year-over-year. Prices for compact SUVs finished 2018 with a 2-percent increase, and midsize utility prices rose nearly 5 percent, according to information shared via Guidelines.
On the premium side of the market, analysts noticed widespread price declines with the midsize car segment sustaining price declines that stretch all the way to 2012. That segment saw a downward price move of 7 percent in 2018.
So what’s ahead in 2019?
J.D. Valuation Services projected that wholesale prices are expected to “cool off” this year with an annual decline predicted to come in at about 1.1 percent.
“There should be increased in used supply once again this year along with more volatile credit conditions, which are expected to apply downward pressure on the used side of the market,” analysts said in their report.
“Gasoline prices and labor conditions are expected to have neutral impacts, while overall demand and consumers’ appetite for used cars, which is supported by increases in equipment as well as more advanced safety and technology features, will help to balance out but not outweigh the anticipated negatives for the year,” analysts went on to say.
|December 2018||November 2018||December 2017||Prior Month||Prior Year|
|Total All Vehicles||$10,620||$10,599||$10,804||0.2%||-1.7%|
Source: ADESA Analytical Services.