Increasingly Tight Used Supply Continues to Ramp Up Auction Prices
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STAMFORD, Conn. –
As auction volumes continue to decline, Canadian used-car prices saw a bit of an uptick this past month.
Nominal used prices — which don’t take MSRP inflation into account — saw a 0.5-percent monthly uptick in May and a year-over-year increase of 3.3 percent, according to the RVI Group’s RVI Risk Outlook for the second quarter of 2013.
And real used-car prices, which do take MSRP inflation into account, were up 1 percent in May versus April and grew 1.1 percent year-over-year.
These increases are due in part to increasingly tight used supply, which isn’t expected to let up anytime soon.
According to RVI, auction volume is continuing to fall. In fact, inventory in the lanes is down 4.1 percent from 2012 on an annual basis.
Ealier this year, auction prices were falling as spring car buying season was wrapping up. But RVI vice president Rene Abdalah warned Auto Remarketing Canada that Q2 would bring different news..
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"We expect wholesale prices to move upward in the second quarter of 2013 from the first quarter. Our forecast shows lower gas prices in the 2nd quarter, which will have a positive impact on our forecast," Abdalah said at the time.
That said, as used-vehicle supply continues to slowly improve, the long-term outlook may bring a reprieve in the lanes to dealers and buyers.
"For the remainder of 2013 though, we expect used-car prices to decline. Increasing used-vehicle supply and exchange rates will have negative impacts on the Canadian used-car market," Abdalah concluded.
Though prices may rise, dealers can rest assured the growth is expected to be small.
“We expect auction volume to increase only slightly in the summer months, increasing by less than 1 percent,” said Wayne Westring, manager of RVI Analytical Services.
“We’re expecting used car prices to hold steady for the summer months. Exchange rates shouldn’t see much movement over this time. Gas prices may see a slight bump up with the summer months upon us, but there shouldn’t be a major impact on used car prices through September,” he continued.
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