ATLANTA -

April saw strength both in the lanes and on the lots, as used-vehicle sales rose by 4 percent, and the last of the tax-season buying spree provided a boost in the lanes, as well. Manheim chief economist Tom Webb contends recent retail market strength is serving to keep auction prices elevated.

And early indications are that overall used-vehicle sales remained strong in May, According to Manheim’s May Auto Industry Brief.

Dealers dealt with high wholesale prices in April, as Webb shared that wholesale prices (on a mix-,mileage- and seasonally adjusted basis) rose for the fourth consecutive month in April.

This resulted in a Manheim Used Vehicle Value Index reading of 124.9 for the month, which represented a 4.8-percent increase from a year ago, according to the report released Thursday.

So, where is the predicted price drop due to expanding used supply?

“Most market participants had been expecting to see some easing in used-vehicle values due to rising wholesale supplies by this point in the year. As an explanation of why it hasn’t happened, we can only beat the same old drum — the strength of the retail market is preventing any meaningful decline in prices,” Webb explained.

“The competitive nature of the wholesale market means that dealers keep on bidding until their expected grosses become insufficient to cover the risk. Today, gross margins have stabilized and net profits have soared as a result of higher throughput and increased operating efficiencies,” he continued.

Prices for all major market classes now have year-over-year price gains, Webb pointed out.

Luxury car prices remained relatively stable, however, and Webb pointed out this segment has a particularly strong performance in April.

“Although wholesale pricing in the luxury segment has suffered for more than a year, luxury vehicles outperformed the overall market in April. Most of that was due to easy year-over-year comps,” Webb said.

And for dealers searching for what Webb coins the “sweet spot” in the wholesale market — they might have to shell out a bit more.

“An analysis of average mileage by price tiers indicates the sweet spot in the wholesale market has moved up in price,” Webb said.  “In April, the strongest pricing (and lowest relative supply) was in the $12,000 to $14,000 price range. In 2013 and early 2014, the strongest pricing was often found in the $8,000 to $10,000 price range.”

Dealers looking for off-rental vehicles in the lanes paid a bit more out of pocket, as well, this past month than they did last year.

Unadjusted for mileage and mix shifts, auction prices for rental risk units continued to rise in April, Webb reported, with rates rising by 7 percent year-over-year.

That said, after adjusting for mileage and mix, prices for off-rental units were down relative to March.

Interestingly, though prices are up year-over-year, mileage is much higher on average for off-rental units than seen in 2013.

Webb pointed out that average mileage for off-rental units in the lanes fell below 40,000 for the first time this year, though this number was still 9 percent higher than a year ago.

And though rumors of an influx of off-rental units to auction later this year are circulating, volumes at auction “remained on the low side,” in April, Webb said.

“Industry sources indicate new units sold into rental fleets declined 7 percent in the first four months of 2014 compared to a year ago,” Webb said, noting rental fleet sales are down, as well. “The bulk of that decline was accounted for by domestic manufacturers.”