| -

CARMEL, Ind. — After reaching the third-consecutive month at an average price above $10,500, ADESA Analytical Services is predicting that this trend in wholesale prices points to a "looming peak in vehicle-vehicle price growth." 

The previous all-time price record came in at about $10,400 in July and August of 2001 prior to the wholesale price crash on 9-11.

"The current high wholesale price levels have translated into retail prices for used vehicles that approach or exceed 60 percent of the price of a new vehicle," explained Tom Kontos, of ADESA, in his monthly commentary.

Offering a glimpse into potential future trends, Kontos went on to say high prices will likely hang around for a while.

"The tight supply situation that is the fundamental driver to high wholesale used-vehicle prices may be with us for quite some time, as fewer used vehicles were ‘produced' when new-vehicle sales fell from approximately 16-17 million per year from 1999-2007 to approximately 13 million and 10 million, respectively, in 2008 and 2009," he said.

"However, there are several ‘moving parts' that may work to mitigate declines in used-vehicle supply and thereby put some downward pressure on used-vehicle prices. For example, sales of new vehicles into rental fleets are up by over 250,000 units through May versus last year," Kontos continued.

Looking more specifically at May trends, Kontos noted that wholesale prices averaged $10,524, down 0.8 percent from April, but up 5.5 percent over 2009.

Full-size SUVs are up 2.3 percent and showed the highest month-over-month average price increase, while most other model-class segments displayed flat to modestly declining prices, according to ADESA Analytical Services.

Manufacturer units, meanwhile, posted a 2.6 percent month-over-month price hike and a 16.9 percent year-over-year climb. As for fleet/lease consignors, they witnessed a 1.1 percent decrease in May over April, and a 9.2 percent year-over-year upswing.

Dealer consignors, on the other hand, saw a 1.4 percent average price decline versus April, but an 11.3-percent climb compared to the previous year.

Auction inventory, on average, stood at a lower level than last year. In fact, inventory levels came in at a 30-day supply at the end of the month, compared to 37 days supply last year. According to Kontos, this continues to indicate tight supply and high auction throughput.

Overall, retail used-vehicle sales in May were down 1.9 percent on a year-over-year basis for franchised dealers, Kontos said, citing CNW Research data. The results were more positive for independent dealers, who saw these sales grow by 12.7 percent. Ultimately, used-vehicle sales were up 5.2 percent for the year.

On a month-over-month basis, used-vehicle sales were up for both franchised (22.5 percent) and independents (37.5 percent).