ATLANTA -

Wholesale prices ended the year down about 2 percent, but they were still historically high due to several market dynamics, including robust retail demand, prudent use of incentives and a greater focus on the certified pre-owned market.  

That’s according to analysis released today from Manheim, which said 2013 used-car values were much higher than they were at the onset of the upward price trending that began five years ago.

“Wholesale used-vehicle prices continue to hold up better than many expected,” Manheim chief economist Tom Webb said.

“Automakers and dealers showed restraint in their use of incentives on new vehicles, which helped maintain the value of used vehicles even as inventories increased,” he added. “We also saw an increased emphasis on certified pre-owned vehicles, providing another boost to used-vehicle values.”  

Specifically, wholesale prices wrapped up the year down 1.9 percent year-over-year, Manheim said. This was after a modest decline in the fourth quarter.

Interestingly enough, used-car supply and new-vehicle sales climbed in 2013, yet used prices did not experience a sharp drop. The reason being that retail demand was hearty.

What’s more, improvement in employment numbers and strong financing offers helped push used demand even further.

Prices at the outset of 2014 will likely see a modest dip, Webb indicated. However, they will remain robust. 

Counteracting stronger new-car sales and greater off-lease numbers pushing up supply, retail used-car demand will likely stay strong.

“We do not expect fundamentals to materially change in 2014, although a few missteps may occur along the way,” Webb said.

“In the first quarter, for example, it’s possible that wholesale supplies may rise faster than expected, and those vehicle segments dependent on tax-refund-fueled demand may once again be disappointed by unpredictable, uneven and relatively low disbursements from the IRS.”

Photo by Dustin Moore/ CC BY