Webb: Truck Segments Lead Year-over-Year Wholesale Gains
ATLANTA — Wholesale values kicked off 2010 with a double-digit year-over-year increase but showed just a modest upswing from December, as the Manheim Used Vehicle Value Index has remained relatively static on a month-over-month basis since hitting a peak in September.
Specifically, the index for January was 117.6, up 15.6 percent from January 2009, but a marginal uptick from 117.5 in December, explained Manheim chief economist Tom Webb.
The index hit its highest point of 2009 in September (118.6) before dipping back down to 117.4 in October and climbing slightly upward the last two months.
Among individual vehicle types, truck segments have been stronger lately mainly because of seasonality, Webb shared.
"Over the past three months, pickups, SUVs and vans have outperformed the car segments, but that is partly reflective of differences in their normal seasonal patterns," stated Webb.
"Longer-term, and accounting for seasonal factors, the differences in price performance between individual market classes have normalized," he added. "In January, however, most luxury segments (cars, SUVs and sports cars) underperformed the overall market."
Examining this in more detail, SUVs showed the heaviest year-over-year price increases in January (up 21 percent), followed by pickups (18.4 percent), and vans (17.8 percent).
Luxury car values jumped 15.8 percent from January 2009, while compact cars climbed 10.6 percent and midsize cars moved forward 7.4 percent.
Looking at consignor groups, rental sales volume jumped "substantially," and average prices, along with mileages, continued to be ahead year-over-year.
Meanwhile, "Program rental volumes at auction continued to decline," Webb pointed out. "Their pricing was very strong, and average mileage was unchanged."
He added that midsize end-of-service fleet car prices showed a moderate slowdown from their "strong finish" in 2009.
"Average mileage on these units moved up noticeably in January. In 2009, average mileage on these units was often distorted by the early pullout of fleet units no longer needed because of work force reductions or corporate financial issues," Webb continued. "As confirmed by the increase in commercial fleet purchases in January (up 29 percent from a depressed year-ago level) companies are returning to a more normal replacement cycle."
Used Retail Market Shows Strength
On the retail side of the used-vehicle market, there appear to be some good signs, even though the new-vehicle sales pace slowed down, Webb explained.
Citing CNW Research data, Webb said there was a "significant gain" in used sales during January, and February could prove fruitful as well.
"Comments from individual dealers confirm that (January) improvement — most reported a strong month, few cited any softening," he shared. "Although several dealers said the inability of some tax preparers to offer refund anticipation loans hurt sales in January, more felt that the higher level of refunds overall more than offset that.
"Indeed, if the expected surge in tax refunds (especially the Earned Income Tax Credit) comes to pass, February used-vehicle sales will definitely benefit," Webb continued.
He also noted: "Although new vehicle sales in January stepped back from their pace in late 2009, the retail used-vehicle market strengthened. From a profit perspective, used vehicles benefited from further improvements in the retail financing environment and dealer efforts to pull tax season sales forward."
Moving on, Webb noted that, interestingly, the problems in the credit market don't stem from availability, but rather, "lack of demand."
"For the first time in nearly three years, the share of banks reporting an increased willingness to lend exceeded the share that was tightening," he pointed out. "The same survey (conducted by the Federal Reserve in January) showed that demand for consumer loans of all types has weakened.
Webb added: "This is consistent with the expected and needed de-leveraging of household balance sheets."
There was a 0.4-percent jump in personal income during December, Webb indicated. However, there was only a 0.2-percent rise in spending during the same time period. As such, the savings rate climbed to 4.8 percent.
"Likewise, the final sales component of GDP rose only 2.3 percent in the fourth quarter (as opposed to the 5.6 percent rise in total GDP)," Webb shared.
"To be sure, this was better than the 1.5-percent increase in final sales in the third quarter (and negative numbers before that), but this level of consumer demand can hardly be called robust," he concluded