ATLANTA and McLEAN, Va. -

Coinciding with Black Book releasing its first index reading of the year, Cox Automotive reported the latest upward moves of the Manheim Used Vehicle Value Index; similar to what the analyst team at J.D. Power Valuation Services spotted, too.

Cox Automotive indicated that wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) rose 1.23% month-over-month in January, pushing the latest Manheim index reading to 163.0.

The index now sits 15.1% higher than a year ago, just a few ticks away from its all-time high of 163.7 set in August.

Furthermore, Cox Automotive mentioned that Manheim Market Report (MMR) prices strengthened as January progressed.

Analysts explained that the 3-year-old MMR Index — which represents the largest model year cohort at auction — increased 0.4% last week, bringing prices even with the start of the year.

“The increase last week was the strongest increase for that week of any year back to 2014,” Cox Automotive said in the commentary that accompanied the latest index update that arrived on Friday.

“Over the month of January, MMR Retention, which is the average difference in price relative to current MMR, averaged 100.4%. The sales conversion rate increased for most of the month,” analysts continued.

Turning back to the index itself, Cox Automotive pointed out that all major market segments generated seasonally adjusted price increases on a year-over-year basis in January.

Leading the way were pickup trucks as prices for those units rose as much as the next two segments in Manheim’s rundown combined. As truck prices spiked 28.7%, prices for luxury cars climbed 16.3%, and prices for SUVs/CUVs rose 12.1%.

Still climbing but not as dramatically were midsize cars (up 6.6%), vans (up 4.5%) and compact cars (up 2.0%).

Not to be left out of the wholesale-price climbing parade, Cox Automotive said that its Manheim data showed the average price for rental risk units sold at auction in January moved higher, too.

The January price increase for those off-rental models moved 8% higher year-over-year and 3% compared to December.

Analysts added the while off-rental vehicle are fetching higher prices, the average mileage for those units in January softened to 49,900 miles, representing a 3% dip versus a year ago and 4% decline month-over-month.

With dealers having to pay higher prices in January, how are their inventory levels looking now? Cox Automotive addressed that topic, too, by leveraging information from another segment of its service-provider portfolio.

Using a rolling seven-day estimate of used retail days’ supply based on vAuto data, analysts recapped that used retail supply peaked at 115 days on April 8. Analysts said normal used retail supply typically is about 44 days.

For January, Cox Automotive discovered dealer inventory finished the month at 39 days.

And for dealers who want to bulk up on inventory no matter the price, Cox Automotive added that the wholesale market finished January with 25 days’ worth of inventory, slightly above what it deems to be the normal level of 23 days.

For comparison, just like when dealer inventory hit a crescendo, analysts estimated that wholesale supply plateaued at 149 days on April 9.

J.D. Power wholesale metrics move higher, too

The J.D. Power Valuation Services team is seeing rising wholesale prices, as well. Weekly data arrived on Thursday via its Used Market Update compiled by senior manager of market insights David Paris.

During each of the last two weeks of January, ending on Jan. 24 and then Jan. 31, Paris reported that wholesale auction prices rose 0.6% during each of those stanzas, extending the longest streak of week-over-week price gains since August.

Thanks to a streak of five consecutive weeks filled with increases, Paris indicated that wholesale prices are now only 8% lower than the peak established in the J.D. Power Valuation Services data set in August.

Looking deeper into the latest weekly data beginning first in the mainstream market, Paris said small-car prices rose, increasing 3.0%. Prices for large pickups, large SUVs and midsize vans ticked up, too, as Paris indicated each increased 1%.

“On the premium side, prices weren’t quite as strong as their mainstream counterparts, price movement was mixed,” Paris said in the latest report. “In general, small and midsize SUV/car prices were positive for the week, while compact and large SUV/car prices were flat to down slightly.”

Despite the price rise, J.D. Power Valuation Services indicated that sales activities in the wholesale world are remaining in the 80,000 to 90,000-unit level

Paris reported that wholesale auction sales of vehicles up to 8 years old reached approximately 86,000 units during the week ending Jan. 31. He pointed out that’s below year-ago volume, which was approximately 112,000 units

“Wholesale sales continue to run approximately 25% to 35% below prior-year levels, which is helping keep used prices strong,” he said.

Now to what dealers might want to know most. What’s going to be happening next with regard to wholesale prices and volume? Paris closed the latest Used Market Update with his newest projections.

“In 2021, used prices are expected to remain near historic levels as pandemic-related macro-economic headwinds remain in place. By year’s end, prices in Q4 2021 are expected to be essentially flat with where prices were in Q4 2020 and will remain higher than pre-virus levels,” Paris said.

“It is important to note, however, that while the outlook remains optimistic, there remains a great deal of uncertainty surrounding the effect of virus outbreaks, vaccine roll out, federal stimulus, employment conditions, new-vehicle production constraints, as well as the ongoing semiconductor (microchip) shortage on the new side of the market,” he continued.

“Given these unknowns, a heightened degree of market volatility should be expected,” Paris added.