Used-Car Prices

April price data reflects auction effectiveness

CARMEL, Ind. - 

Going beyond just the metrics, KAR Auction Services chief economist Tom Kontos explained why the latest wholesale price movements reflect auction successes — especially when it comes to handling off-lease vehicles.

According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, values in April averaged $11,116, which represented a 2.7-percent lift compared to March but a 0.2-percent dip relative to April of last year.

Analysts indicated average prices were down on a year-over-year basis for both cars and trucks, but luxury cars and minivans were segments with significant volume that had strong year-over-year price gains.

“Average wholesale used vehicle prices registered their second consecutive year-over-year price decline in April,” Kontos said in his latest installment of the Kontos Kommentary. However, April prices were seasonally strong, despite softer retail demand. 

“Prices appeared to be particularly strong for off-lease vehicles, which is testimony to the effectiveness of upstream sales in preventing oversupply of these units at physical auctions,” he continued.

Kontos also continued his deep dive into trends involving fleet and off-lease vehicles that are 3 years old with less than 45,000 miles on the odometer.

When holding constant for sale type, model-year age, mileage, and model class segment, he found that average prices moved higher on a year-over-year basis for both midsize cars and midsize SUV/CUVs. Midsize car prices climbed 4.0 percent or $465 to $12,180 while prices for midsize SUVs and CUVs rose 4.3 percent or $875 to $21,233.

“This analysis indicates that wholesale values for off-lease units are holding up well despite the overall softening market trend and is evidence of the effectiveness of new remarketing approaches in redistributing supply into various sales channels,” Kontos said.

Drilling deeper into the April data, Kontos went on to note that average wholesale prices for used vehicles remarketed by manufacturers rose 4.6 percent month-over-month and 11.5 percent year-over-year.

Prices for fleet/lease consignors were up 2.3 percent sequentially and up 5.8 percent annually.

And average prices for dealer consignors were up 4.5 percent versus March but down 1.5 percent relative to April of last year.

Kontos closed with data he collected from the National Automobile Dealers Association that showed retail used-vehicle sales by franchised dealers softened 12.6 percent year-over-year and  12.0 percent on the same time comparison for independent dealers.

Kontos added that April certified pre-owned sales were down 14.6 percent from the prior month and down 5.8 percent year-over-year, according to figures from Autodata Corp.

“It should be noted that both the NADA and Autodata sales numbers are based on fewer selling days in April, which tends to overstate the declines,” Kontos said. “On a year-to-date basis, CPO sales are up 1.5 percent versus last year.”               

Kontos elaborated about the market in a video available here and at the top of this page.

ADESA Wholesale Used-Vehicle Price Trends

   Average  Price  ($/Unit)  Latest  Month Versus
   April 2018  March 2018  April 2017  Prior Month  Prior Year
 Total All Vehicles  $11,116  $10,824  $11,141  2.7%  -0.2%
 Total Cars  $8,778  $8,595  $8,968  2.1%  -2.1%
 Compact Car  $6,562  $6,611  $6,805  -0.7%  -3.6%
 Midsize Car  $7,701  $7,591  $7,962  1.5%  -3.3%
 Full-size Car  $7,553  $7,274  $8,504  6.6%  -8.8%
 Luxury Car  $13,474  $13,088  $13,317  2.9%  1.2%
 Sporty Car  $14,625  $14,194  $14,694  3.0%  -0.5%
 Total Trucks  $13,139  $12,779  $13,187  2.8%  -0.4%
 Minivan  $9,901  $9,876  $9,060  0.2%  9.3%
 Full-size Van  $13,807  $13,195  $13,005  4.6%  6.2%
 Compact SUV/CUV  $11,096  $10,777  $11,083  3.0%  0.1%
 Midsize SUV/CUV  $11,425  $11,031  $11,773  3.6%  -3.0%
 Full-size SUV/CUV  $13,878  $13,379  $14,085  3.7%  -1.5%
 Luxury SUV/CUV  $18,645  $18,290  $19,055  1.9%  -2.2%
 Compact Pickup  $9,407  $8,905  $9,326  5.6%  0.9%
 Full-size Pickup  $16,137  $15,707  $16,520  2.7%  -2.3%

Source: ADESA Analytical Services.

Moody's Analytics: The non-impact of off-lease volume on supply and price


An assessment of supply is critical to understanding future residual price trends, though difficult to calculate. Our aim here is to help readers better understand the drivers of used-vehicle supply in the U.S.

In 2015, about 17.5 million new cars and trucks were sold in the U.S. Let’s assume that all of these vehicles were 2015 model year and that such vehicles are not sold in adjacent years. In the future, this cohort of 2015 vehicles will be traded in and repoed, bought from used car dealers, exchanged privately, totaled by insurance companies, driven into the ground, repaired, stripped for parts and ultimately scrapped. Some 2015 model year vehicles will be exported to other countries, while a much smaller number of foreign vehicles will be imported. 

What we know for a fact is that 2015 vehicles will never again be produced. The stock of such autos can and will decline in future, but it can never increase.

There are actually only three ways to increase the supply of 3-year-old cars in the U.S. First: produce an extra new car today and then wait for three years. Second: import an appropriately aged used vehicle from overseas. Third: rescue a vehicle that, for whatever reason, had been removed from the current cohort of 3-year-old vehicles.

The first of these is the main driver of used vehicle supply. We find, quite reliably after controlling for demand-side ructions, that declines in used car prices lag increases in new vehicle sales by between 18 months and two years. 

In terms of used vehicle exports, data are somewhat spotty, but reveal that in 2013 about 800,000 used vehicles were transferred abroad. Used cars and trucks typically flow from richer countries to poorer countries so apart from the odd vintage car enthusiast bringing home a beloved 1964 Porsche 911, we can surmise that vehicle exports exceed imports by a healthy margin. One can imagine that exports are impacted by domestic prices, rising when U.S. prices are suppressed and falling when local prices are relatively high. 

The third supply driver — the rate at which older vehicles are retired — is perhaps the most interesting of the three. We know from the Cuban experience that when new vehicle production or imports are severely curtailed, the value attached to older vehicles rises apparently without limit. In the U.S., the supply dynamics are less stark but people still make supply decisions when determining, for example, whether to repair the blown head gasket on their 1998 F-150 or buy a different car. Cars are often retired when they still have many years of safe motoring ahead of them. People may even retire perfectly good cars just because they like the features offered on newer models. If the propensity to retire vehicles ever rises, this represents a supply contraction that will potentially impact used vehicle prices.

Just as important is a consideration of the things that do not increase the supply of used cars. If, for example, my neighbor offers to buy my three-year-old hatchback and I agree to sell it, there is no change in either the demand or supply position of the market. Yesterday I was consuming the vehicle and my neighbor was catching the bus to work; today our roles are reversed.  

The next question we must address is whether these dynamics change if a dealer acts as a middleman to the transaction between myself and my neighbor. While the dealership is providing an indispensable retail service by matching my needs with those of my neighbor, the only way a used car dealer can impact supply is by opting to send a vehicle in their possession off to the salvage yard.

There is no doubt that dealer inventories can rise if there are too many sellers and not enough buyers. This issue is currently a major concern because of the flood of off-lease vehicles that have been present in the industry over the past few years. The critical thing to keep in mind is that the total number of 2015 vehicles in circulation in the U.S. is unaffected by the nature of their original financing arrangements. For off-lease volume to be a genuine problem we would need the demand for clocking miles in three-year-old cars to decline relative to the normal level. There is no evidence that this phenomenon has recently occurred.

So what explains the declines we have witnessed in used car prices over the past few years? For one thing, prices entered this period at an aggregate level that was well above trend. This occurred because new vehicle sales fell by half during the Great Recession — causing supply to contract — and only slowly recovered in the years immediately afterward. The paucity of 2008 model year vehicles is a market feature that is still in evidence today. 

New vehicle production and sales then increased at a steady clip in recent years, causing prices to fall back toward trend levels. Americans have also shown an increased propensity to keep older cars in operation for longer and this has also helped to boost available supply.

Trading used cars among ourselves is great for generating retail service fees for dealers but it has no bearing on vehicle supply. When analyzing possible implications for residual prices, market participants would be wise to ask whether a particular event adds to or subtracts from the size of the vehicle fleet. 

It is only these events that can influence vehicle supply, and therefore vehicle prices. 

Tony Hughes is a managing director at Moody’s Analytics, where he leads the development of used-car price forecasts.

Lane watch: Truck prices stabilize


While an auction general manager in Texas shared short-term expectations for what might be happening in the lanes, the newest Black Book Market Insights report also highlighted a noteworthy development that just occurred.

Editors determined truck values stabilized last week following several weeks of volatility, while cars saw higher demand at auction.

“Sedans drop in value, but sporty cars see a seasonal increase with summer around the corner. Luxury cars and crossovers experience a larger decline,” said Anil Goyal, executive vice president of operations at Black Book.

Volume-weighted, editors indicated overall car segment values decreased by 0.27 percent last week. In comparison, values had increased on average by 0.12 percent per week during the previous four weeks.

Within cars, Black Book noticed the sporty car segment increased the most in value last week, rising by 0.18 percent.

Again volume-weighted, editors noticed overall truck segment values (including pickups, SUVs, and vans) decreased by just 0.05 percent last week, same as the average drop per week in the previous four weeks.

Among trucks, Black Book said the sub-compact crossover segment increased the most in value last week, moving 0.22 percent higher.

Turning next to what Black Book’s representatives captured at sales nationwide, one lane watcher caught up with a general manager of an auction in Texas.

“The nicer, more expensive vehicles have softened here. Our market feels like it has another month or so before we see increased volatility across the board,” the GM said.

The scene at a couple of locations revealed how the hammer isn’t falling with as much frequency as it did during the height of the spring market.

Out of Georgia: “There was an abundance of no-sales in both the rental/lease lanes as well as the dealer lanes. In addition, the less expensive older vehicles that sold well recently experienced sporadic sales.”

Out of Michigan: “Consignment is down, but anything nice sells and for good money. Retail remains good but certainly not great.”

And speaking of retail, what’s occurring in Tennessee is perhaps a reflection of dealership activity.

“Sub-compact and units under $10,000 are in demand. The higher priced vehicles are much harder to turn,” the lane watcher in the Volunteer State said.

Finally, the report out of Pennsylvania might have given another glimpse of what prices at the pump are doing to dealer buying activity at the auction.

“A dealer out of New York who typically buys trucks stated that he is purchasing more passenger cars than he can remember,” the Black Book representative said.

Spring market recap: 4 notable price increases and pump price movement

CARY, N.C. - 

With spring unofficially ending with Memorial Day weekend just ahead, Black Book and J.D. Power Valuation Services took in-depth looks at what happened in the lanes during the spring market and a few general economic trends that unfolded.

Edmunds also considered the ongoing challenge automakers face trying to retail green vehicles.

Black Book acknowledged that spring is typically viewed as a strong season for dealers since many people receive their tax rebate checks and immediately use them to purchase a used car or truck. This past spring season — which editors considered to take place between Feb. 1 and May 1 — four mainstream car segments increased on average by 3.0 percent. That group included:

— Sub-compact car: up 2.6 percent

— Compact car: up 5.3 percent

— Midsize car: up 3.1 percent

— Full-size car: up 1.0 percent

For the prior year, editors recollected the spring seasonality lift in values see was slight. During the same months in 2017, Black Book indicated the values on these car segments was almost flat, increasing by just 0.3 percent.

During the same period of 2016, Black Book mentioned only one of these car segments increased in value. Overall, values declined by 0.9 percent on average across the four segments.

“I believe what we’re seeing is a handful of factors coming together this spring season that has brought us to a strengthening of the used market for mainstream car segments,” said Anil Goyal, executive vice president of operations at Black Book.

“With lower demand, these sedan segments dropped in value for used vehicles, entering 2018 where their prices reached a point of attractive value for many shoppers,” Goyal continued. “Second, much of the excess used supply was absorbed in late 2017 due to replacement demand caused by the hurricanes.

“Third, the additional money due to the tax reform has helped with vehicle affordability. Fourth, the economy continues to hum along with consumer confidence reaching its highest point in 17 years,” he went on to say. “Lastly, with gas prices on the rise, there are a few more shoppers looking at mainstream sedans with fuel economy in mind."

More analysis of the economy and gas prices

The spring edition of Perspective generated by the J.D. Power Valuation Services picked up on Goyal’s thoughts and took an expanded look at recent economic activity and where prices at the pump might be going.

J.D. Power Valuation Services recapped that the U.S. Bureau of Economic Analysis (BEA) revised estimates of Q4 GDP growth. The estimate lifted from 2.5 percent to an annual rate of 2.9 percent.

Analysts explained the primary causes for growth have remained consistent over the past several months: personal consumer expenditure, nonresidential fixed investments, exports and federal government spending.

The BEA also indicated real GDP grew by an annual average of 2.6 percent in 2017, a marked increased from 1.8 percent growth during 2016. The BEA expects a similar growth trend as analysis evolves into 2018.

Meanwhile, J.D. Power Valuation Services pointed out that the unemployment rate remained unchanged at 4.1 percent in March as employment grew in manufacturing, health care, mining, and professional and business services. Report authors noted that the March 2018 U6 unemployment rate — which measures discouraged, part-time, or underemployed workers in the economy — sits at 8 percent, which is slightly down from 8.2 percent in February.

The recap in Perspective also said non-farm employment increased by 103,000 jobs in March with most jobs coming from manufacturing, health care and mining. This was a marginal increase in job growth, following February’s growth of 326,000 jobs.

Furthermore, J.D. Power Valuation Services recapped that wage growth continued to stall in February with real average hourly earnings for all employees increasing by 0.2 percent. Hourly wages in nonfarm payrolls went from $26.71 to $26.75, and average weekly earnings increased by $4.06 from $918.82 to $922.88.

“This marginal increase in wage growth continues the trend of relatively flat growth trending into 2018,” analysts said.

So how might consumers use that money to make a vehicle purchase and keep the engine running?

J.D. Power Valuation Services recapped that energy prices remained relatively flat in the months of February and March as global demand remained flat.

“Seasonal expectations counteracted any downward pressure on fuel prices from an excess supply of fuel the past month,” analysts said.

U.S. gas prices remained the same in March ($2.59 per gallon) as they were in February. The year-over-year increase in gas prices was approximately $0.26 per gallon (9.8 percent) higher than 2017.

Experts debate whether the current uptick in global demand for oil will taper off (which would lead to depressed prices), or if gas prices will marginally increase as demand remains constant,” analysts added.

Fuel-efficient vehicles going forward

Earlier this month, leaders of several automakers met with President Trump to discuss fuel-efficiency standards among an array of topics.

If gas prices continue to rise, perhaps demand for green vehicles will grow. For now, Edmunds indicated that sales of green vehicles (hybrids, plug-in hybrids and electric vehicles) in both Q1 as well as from January through April accounted for just 3.2 percent of new-model turns.

Jeremy Acevedo, manager of industry analysis at Edmunds, explained the conundrum OEMs now face.

“The automakers are finding themselves in a political quagmire of their own making. Companies are always going to push for what's best for their bottom line, and at this point, a compromise with California to maintain a single standard makes the best business sense,” said Acevedo, who also noted that 13 percent of all new vehicles sold in Q1 rolled over the curb at franchised dealerships in the Golden State.

“While it seems as though the automakers are somewhat unified in their approach, each company (went) into this meeting with their own agenda of how much they’re willing to concede...or not,” he continued.

“While Ford and GM have stated publicly they support continuous improvements in fuel economy, they’re unlikely to say no to laxer fuel efficiency rules given the flexibility it provides to play up to the strong consumer demand for trucks and SUVs,” Acevedo went on to say.

“But if the pendulum swings too far backward, there may be dissent from automakers that already have a robust green portfolio and are poised to be at a competitive advantage should stricter standards hold,” he added.

May wholesale price forecast improves versus a year ago

McLEAN, Va. - 

While analysts noticed April’s wholesale price movements went in a direction not seen during that particular month in seven years, the team at J.D. Power Valuation Services is projecting the change in May prices won’t be as dramatic as seen a year ago.

According to the latest installment of Guidelines, J.D. Power Valuation Services is expecting wholesale prices for vehicles up to 8 years in age to decline by about 0.2 percent in May. That’s only a fraction of what analysts recorded in May of last year when prices decreased by 1.7 percent.

The report indicated there are a variety of environmental factors in play that could help or hinder used-vehicle sales; thus, impacting wholesale prices.

“Negative forecast factors hurting used vehicles continue to be incentives, an anticipated increase in used supply, worsening credit conditions and increasing gasoline prices,” analysts said.

“However, positive factors such as favorable labor conditions, strengthening housing prices along with long-term quality improvements will outweigh the negatives,” analysts went on to say.

April pricing recap

With prices remaining stronger than anticipated, April represented the second-highest upward move of the J.D. Power Valuation Services Seasonally Adjusted Used Vehicle Price Index recorded so far this year.

The reading climbed 1 point higher to 117.1, leaving the index 3.4 points above what J.D. Power Valuations Services posted in April of last year.

What pushed the reading was an increase of 0.2 percent in vehicle prices for units up to 8 years in age. Analysts said in Guidelines that April’s behavior was “atypical” since it was the best performance for that specific month since 2011.

“Looking back, we’ve observed the development of a trend that began in 2014,” analysts said in the report. “It seems that prices have been stronger year-over-year for the April period.

“This can be attributed toward an extended spring rebound in used-vehicle prices that we traditionally see during the first quarter of the year,” they added.

Looking at price moves at the segment level, J.D. Power Valuation Services noticed that mainstream segments performed “very well” in April with the exception of large utilities, which softened by 1.3 percent. Prices for large utilities now have dipped for four consecutive months.

What’s triggered the decline, according to Guidelines, is the steady rise in auction volume for these particular models. Analysts pegged the year-over-year volume jump in April for large utilities at 33.2 percent and the year-to-date rise at 31.4 percent.

Enjoying price increases slightly above the overall April figure were midsize cars and large pickups, which both experienced a 0.6-percent uptick, according to J.D. Power Valuation Services.

Switching to luxury vehicles, analysts pointed out the pricing bright spot stemmed from luxury compact utilities climbing by 0.7 percent. Otherwise, “luxury segments didn’t fare as well as their mainstream counterparts.”

The recap in Guidelines showed that the luxury segment sustaining the most dramatic price decline in April included luxury large cars, which dropped by 5.7 percent.

“However, it’s important to remember overall volume of this segment is extremely small,” analysts said. “In fact, it’s the smallest of all the segments we examine.

“As a result, any material decline in individual model wholesale prices is extremely amplified,” they added.

To reinforce the point, J.D. Power Valuation Services cited the April price drop-offs of the 2013 and 2014 Lincoln MKS. Auction prices for these vehicles plummeted by 26 percent and 19 percent, respectively.

For more analysis from J.D. Power Valuation Services, see the podcast below with Jonathan Banks, the company’s vice president of vehicle analysis and analytics, recorded at NADA Show 2018 earlier this year. 



Black Book: Spring market 2018 is over


Black Book has made the call. Spring market 2018 is finished.

This week’s Black Book Market Insights report included that declaration as well as reinforcement of that stance coming via what representatives spotted in the lanes nationwide.

“The spring market season is over as values show mild declines across the board. Mainstream sedans have been in demand in the used market even as sales declined for new sedans,” said Anil Goyal, executive vice president of operations at Black Book.

Volume-weighted, editors determined that overall car segment values decreased by 0.08 percent last week. In comparison, Black Book recapped that values had increased on average by 0.18 percent per week during the previous four weeks.

Likely reflecting summer’s official approach, Black Book pointed out the sporty car segment increased the most in value last week, rising by 0.38 percent.

Again volume-weighted, editors indicated overall truck segment values — including pickups, SUVs, and vans — also softened by 0.08 percent last week, similar to the average drop of 0.07 percent per week that Black Book recorded during the previous four weeks.

Among trucks, editors found the compact van segment increased the most in value last week, surging 0.97 percent higher.

Part of what helped Black Book editors learn the spring market wrapped up for the season included the anecdotes lane representatives collected while attending sales nationwide. The rundown began in Massachusetts.

“For the first time in many weeks, the sellers reported that their results were just OK. This is a change from the robust activity from the last several weeks,” Black Book’s representative in Massachusetts reported.

Down in Georgia, a similar situation unfolded with the lane observer saying, “The prices continue to soften here. An active buyer said that the market had stabilized and prices were no longer going up but starting to drop.”

Out West, the hammer didn’t drop as frequently, either.

“Lots of high-mileage vehicles and no-sales in the lanes today. Dealers are being much more selective,” said Black Book’s lane watcher stationed in California.

While the overall spring market might be finished for the year, Black Book also shared a pair of recaps where the wholesale space showed one last gasp for the season.

From Michigan: “Retail in our area is positive but not exceptional. There was good bidding activity this week at the auction.”

From South Carolina: “Small and midsize sedans continue to be in demand and the buyers are willing to pay up for them.”

April wholesale trends uncover depth of spring market impact


Black Book recently shared its latest analysis that shed light on exactly how much of an impact the spring market generated this year.

According to Black Book data, the average price of a used vehicle for model years 2012 through 2016 increased in value by 0.3 percent during April, fueled by a strong spring selling season for cars.

Editors indicated car values ticked up 1.3 percent during the month while trucks saw a decrease of 0.4 percent.

Black Book added that all vehicles are averaging a 12-month softening of 15.1 percent.

A total of nine vehicle segments increased in overall value during spring, according to Black Book, including five car segments. Leading the way were midsize and compact cars, which each rose 2.5 percent in April.

Vehicles in midsize car segment include the Nissan Altima, Chrysler 200, Honda Accord, Ford Fusion, Toyota Camry, Chevrolet Malibu, Kia Optima and the Hyundai Sonata. Vehicles in this segment finished April with an average price of $9,732, which settled 15.5 percent lower than a year ago.

Vehicles in the compact car segment include the Chevrolet Cruze, Ford Focus, Honda Civic, Toyota Corolla, Volkswagen Jetta, Nissan Sentra and the Hyundai Elantra. Vehicles in this segment wrapped up April with an average price of $8,210; a figure down 13.7 percent from a year ago.

Black Book pointed out that sub-compact crossovers saw the largest boost for trucks, jumping 1.5 percent in April.

Vehicles in sub-compact crossover segment include the Buick Encore, Nissan Juke, Chevrolet Trax, Honda HR-V and the Jeep Renegade. Vehicles in this segment finished April with an average price of $11,652, representing a 15.6 percent drop from year-ago levels.

Editors noticed the other segments seeing increases in April included the full-size car (up 1.0 percent), compact crossover/SUV (up 0.5 percent), sub-compact car (up 0.5 percent), compact van (up 0.3 percent) and small pickup (up 0.1 percent).

Black Book also mentioned the two segments that saw the highest depreciation on the month included the full-size crossover/SUV, and midsize luxury CUV/SUV, each declining by 1.5 percent.

Vehicles in the full-size crossover/SUV segment include the Chevrolet Tahoe, Chevrolet Suburban, Dodge Durango, Ford Expedition, GMC Yukon, Toyota Sequoia and the Nissan Armada.

Vehicles in the midsize luxury CUV/SUV segment include the Lexus RX 350, Acura MDX, BMW X5, Buick Enclave, Infiniti QX60, Mercedes Benz M Class and the Lincoln MKX.

“The above-average strength of the spring season was on full display during April, with a total of nine vehicle segments showing an increase in value,” said Anil Goyal, executive vice president of operations at Black Book.

“What’s impressive most in April is that five of these segments were cars, so it will be interesting to see what the remaining of the year holds for these segments as we return to more typical seasonal depreciation patterns for vehicles overall,” Goyal continued.

Spring market starts to wind down


With more than seven days into May already in the books, Black Book is seeing even stronger signals that the spring market might be in its closing stages for 2018.

This week’s Black Book Market Insights report highlighted how most car values finally are cooling off from the last several weeks of increasing price activity. That being said, editors still spotted a handful of car segments still showing a slight uptick in values this past week.

“The market is shifting towards neutral as spring seasonality wears off. Non-luxury segments in small crossovers and sedans showed stability last week,” said Anil Goyal, executive vice president of operations at Black Book, in the analysis.

Volume-weighted, editors determined that overall car segment values barely increased by just 0.05 percent last week. In comparison, the market values for cars had risen by 0.24 percent during the prior week.

Within cars, Black Book reiterated that all non-luxury segments performed well with values stable to slightly up.

Again volume-weighted, editors noticed that overall truck segment values (including pickups, SUVs and vans) settled nearly flat. In comparison, the market values had decreased by just 0.06 percent during the previous week.

Within trucks, Black Book found that the subcompact luxury crossover segment performed the worst, softening by 0.48 percent of $80.

Moving on to what Black Book lane watchers observed at auctions, two of the four reports coming back into headquarters originated from Florida.

One representative shared, “The financial account reps did well and were selling most everything. The dealer lanes were better than they have been in a while.”

The other watcher added, “We had a lot of no-sales on the older inventory which was a pattern shift. Trucks and SUVs are still the center of attention.”

Next door in Georgia, some similar patterns were observed.

“Prices were strong all day in the manufacturer lanes. There was a fair amount of no-sales in the dealer lanes but the units that sold brought good money,” Black Book’s representative stationed in Georgia said. “Overall, vehicles 2-years-old or older sold well while the newer ones were hit or miss depending on condition.”

Finally, the anecdote out of the Midwest might have summarized the buzz in the lanes nationwide.

 “The vehicles that sell bring good money, but there remains a shortage of clean, low-mileage units,” Black Book’s lane watcher in Indiana said.

Specialty markets update

As they do at the beginning of each month, Black Book editors recapped their latest assessments of the specialty markets. Here are their latest observations:

— Collectibles: Black Book indicated that there have been several successful collectible car auctions this spring. Editors pointed out that Barrett-Jackson’s Palm Beach sale, celebrating its 16th anniversary, was perhaps the most visible, as it was a four-day event and was extensively televised.

— Recreation vehicles: Black Book noted that RV values at auction, including most towable and motorized vehicle segments, decreased last month. “This is not typical for this time of year, as most dealers are scrambling to stock their lots before the first customers come in,” editors said.

— Powersports: Black Book insisted that cruisers are the “big winners this month,” as both metrics and domestic v-twins are showing solid gains as the powersports market enters its strongest portion of the year.

— Heavy-duty trucks: Editors said that wholesale prices are doing “exceptionally well,” with a small overall deprecation showing up on late models, while the older segment dropped a little more.

— Medium duty: Black Book explained that limited used supply is helping older units maintain their values slightly better than the late models. “In addition, new supply is helping to put some added pressure on late model units causing them to depreciate a bit more than they have in the past couple of months,” editors added.

Cox Automotive sees April used sales soften as wholesale prices tick higher


Along with pinpointing what the Manheim Used Vehicle Value Index did in April, Cox Automotive experts also projected how much and why used-vehicle sales softened a bit last month.

According to Cox Automotive estimates, used-vehicle sales decreased by 2 percent year-over-year in April versus the same month last year. Analysts said the dip primarily stemmed as a result of having two fewer selling days.

Cox Automotive highlighted the annualized pace of used vehicle sales is up 1 percent over last year.

“We estimate the April used SAAR to be 39.7 million, the highest level in four months,” analysts said.

Cox Automotive mentioned April new-vehicle sales decreased, sliding by 5 percent year-over-year with two fewer selling days compared to April 2017. The April SAAR came in at 17.1 million, up from last year’s 17.0 million; it is the eighth straight month of more than 17 million SAAR and the fifth-best April SAAR on record.

Analysts added that cars continue to see sharp declines as sales in April fell 21 percent compared to last year, with major car segments’ having sales declines. They pointed out light trucks outperformed cars in April and were up 5 percent year-over-year.

Cox Automotive went on to note that the combined rental, commercial and government purchases of new vehicles climbed 7 percent year-over-year in April, led by increases in commercial (up 9 percent) and rental (up 7 percent) channels.

Analysts closed the discussion by saying new-vehicle inventories came in higher than 4 million units for the second straight month, and inventories are at their highest levels since June of last year.

Wholesale-price movements

Looking now at the wholesale space, Cox Automotive found that used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased 1.33 percent month-over-month in April. This movement brought the Manheim Used Vehicle Value Index to 132.5, which was a 6.3 percent increase from a year ago and the highest level since last November.

“Looking at trends in weekly Manheim Market Report (MMR) prices, the traditional spring bounce this year started three weeks later than it did in 2016 and earlier years and peaked in April in week 15,” analysts said.

“Used-vehicle prices are now moving down but remain higher now compared to where they were at the beginning of the year than any of the last three years,” they continued.

On a year-over-year basis, Cox Automotive noticed all major market segments saw price gains in April. Compact cars and vans outperformed the overall market, climbing by 6.6 percent and 13.3 percent respectively.

Meanwhile, the latest index update showed SUV/CUVs and pickups underperformed the overall market, rising by 5.8 percent and 4.8 percent, respectively.

“Collectively, nonluxury vehicles outperformed the market, while luxury vehicles underperformed,” analysts said. “This is not unusual for the spring, as the observed bounce occurs only in nonluxury vehicles.

Also in the wholesale space, Cox Automotive determined that rental risk pricing strengthened.

Analysts found that the average price for rental risk units sold at auction in April jumped 9 percent year-over-year. Rental risk prices moved 2 percent higher compared to March.

The report mentioned average mileage for rental risk units in April (at 43,500 miles) came in 10 percent above a year ago but 3 percent lower month-over-month. 

General economic update

Cox Automotive closed its latest analysis by highlighting the continued strong economic momentum on display in the U.S.

Analysts recapped that the economy grew 2.3 percent in the first quarter, a decline from last year’s overall growth of 2.5 percent, but much better than the first quarter of last year’s “lackluster” 1.2-percent growth.

Cox Automotive said the second quarter should see growth rebound in keeping with the expected 2.8 percent to 3.0 percent likely GDP growth for 2018.

Analysts added that consumer confidence rebounded in April after declining in March. The April index level was the second-best level going back to November 2000.

Cars stay strong as spring market shows slight signs of slowing


With perhaps a sign the spring market might be in its latter stage, a handful of car segments that have continued to increase in value, according to Black Book.

The latest Black Book Market Insights report showed smaller car and sporty car segments demonstrated the strongest price performance last week.

“Broad market strength was seen last week across most car and truck segments. Luxury segments are largely sitting out the extended spring rally this year,” said Anil Goyal, executive vice president of operations at Black Book

Volume-weighted, editors determined overall car segment values increased by 0.24 percent last week. That reading remains on par with what Black Book has noticed for a month as car values had increased on average by 0.23 percent per week during the previous four weeks.

Editors pointed out that the midsize car and sporty car segments increased the most in value last week, each climbing by 0.38 percent.

Again volume-weighted, Black Book found that overall truck segment values (including pickups, SUVs, and vans) decreased by just 0.06 percent last week. In comparison, the values had decreased on average by 0.13 percent per week during the previous four weeks.

Within trucks, editors noted the compact luxury crossover/SUV and midsize luxury crossover/SUV segments decreased the most in value last week at 0.38 percent and 0.34 percent, respectively.

Turning next to what Black Book representatives noticed in the lanes, the report surfacing in Florida indicated that perhaps the spring momentum might be starting to wane.

“The dealer consigned vehicles struggled mightily with an abundance of no-sales. The market here is experiencing a post-tax season adjustment,” the lane watcher in the Sunshine State.

Meanwhile, moving into the Midwest, the auction activity seems as robust as ever.

“The retail used vehicle market remains good here, so dealers are buying at auction. Full size SUVs remain scarce,” Black Book’s representative stationed in Indiana said.

Sliding East to Pennsylvania, auction is lively, especially when certain models roll over the block.

“Dealers are having difficulty finding and purchasing enough trucks and SUVs for their lots. Because of this shortage, prices remain strong on those models,” Black Book’s personnel from the Keystone State shared.

Finally, out in Colorado, the spring market might be changing there, too.

“It is still a sellers’ market in Colorado, but the momentum has recently slowed a bit,” Black Book’s representative said.