ADESA’s Tom Kontos pointed to two factors as to why February’s wholesale price movement ended up being “atypical.”
According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, used vaules in February averaged $9,839 — down 1.4 percent compared to January, but up 0.9 percent relative to February of last year.
Kontos mentioned in his monthly commentary that compact cars and vans, which are popular rental and fleet vehicles, were the only segments that had both monthly and annual price gains.
“Wholesale prices were down in February versus January, a-typical of their seasonal pattern, but were up modestly on a year-over-year basis, despite continued wholesale supply growth coupled with weaker retail demand limited by severe weather conditions,” Kontos said.
“This unusual pattern would indicate that dealers were fairly aggressive in proactively bidding in-lane and online for the vehicles they need for the budding spring market, especially highly certifiable off-rental program vehicles remarketed by auto manufacturers,” he went on to say.
ADESA indicated prices for used vehicles remarketed by manufacturers moved up 1.3 percent month-over-month and 6.3 percent year-over-year. Kontos reiterated that manufacturers capitalized on strong demand for certifiable units.
Analysts also mentioned prices for fleet/lease consignors softened 0.5 percent sequentially, but climbed 1.1 percent annually.
Furthermore, ADESA noted dealer consignors saw a 1.1-percent average price increase versus January and a 0.9-percent uptick versus February of last year.
Kontos wrapped up his commentary by recapping CNW Research information that indicated retail used-vehicle sales dropped 15.6 percent month-over-month “as severe weather again negatively impacted auto shopping.”
Meanwhile, Kontos mentioned Autodata Corp. information that showed sales of certified pre-owned vehicles in February rose 7.7 percent above the prior month and 14.1 percent above the prior year
“The strong certified sales may have been a factor in strong pricing for off-rental program units sold by the manufacturers,” he said.
|Average Prices ($/Unit)||Latest Month Versus:|
|Feb-14||Jan-14||Feb-13||Prior Month||Prior Year|
|Total All Vehicles||$9,839||$9,983||$9,747||-1.4%||0.9%|
KAR Auction Services Amends and Restates Credit Agreement
In other company news, ADESA parent KAR Auction Services announced Tuesday that it amended and restated its credit agreement dated as of May 19, 2011.
Officials explained the term loans under the original credit agreement have been repaid in full and terminated, and refinanced with a $650 million three-year senior secured term loan B-1 facility and a $1.120 billion seven-year senior secured term loan B-2 facility.
In addition, KAR noted the amended and restated credit agreement also established a five-year $250 million revolving credit facility in place of the previous revolving commitments. The interest rate of term loan B-1 was reduced to LIBOR plus 2.50 percent.
The company computed the interest rate of term loan B-2 remains at LIBOR plus 2.75 percent but the LIBOR floor was reduced to 0.75 percent.
“The reduction in pricing is expected to save the company an annualized amount of approximately $9 million in cash interest,” KAR said. “The revolving commitments may be used for ongoing working capital needs and general corporate purposes for the company and its subsidiaries. The company has not drawn any amounts under the revolver.”