CARY, N.C. -

Wholesale-price analysis and projections from Black Book, Cox Automotive and J.D. Power Valuation Services contained a variety of encouraging assessments about the trajectory of this vehicle metric.

Beginning with the latest update from J.D. Power Valuation Services, analysts there said wholesale auction prices ticked up by a little more than 1% on a weekly comparison for the week ending April 26. Analysts indicated the positive move represented the first one they’ve seen since the middle of March.

Because of the pandemic, the latest wholesale-price reading landed 14% below J.D. Power Valuation Services’ pre-virus forecast for the week.

“While the small improvement can be viewed as a positive indicator of a strengthening market, results still represent a significant discount versus pre-virus levels,” J.D. Power Valuation Services said in the report containing its latest price update.

After several weeks of softness, J.D. Power Valuation Services found that mainstream passenger car prices improved during the reporting period by an average of 2%.

“While mainstream passenger cars experienced small gains, segment prices remain some of the most depressed when comparing the week ending April 26 to pre-virus expectations,” analysts said.

“With that said, mainstream small, compact, and midsize car prices are down by roughly 17%, while SUVs and compact and full-size pickup prices — while still down — performed much better at down by 9% and 14%, respectively,” analysts went on to say.

Over at Cox Automotive, chief economist Jonathan Smoke said in a video presentation that his team’s data shows “wholesale used-vehicle values are starting to stabilize.”

Smoke pointed out the 3-year-old MMR Index declined 2% for the week ending April 25 and is now down 10.2% over the past five weeks. But he also mentioned the MMR Retention Gap narrowed to 2.7%. Cox Automotive calls MMR Retention as average auction transaction prices compared to MMR values

“We have been advising clients to adjust MMR by the retention rate to get an estimate of what it takes to sell in today’s marketplace. Given the improvement in the retention rate, that may be no longer necessary soon,” Smoke said.

Short-term and long-term forecasts

Black Book’s analyst team tackled the challenge of updating short-term and long-term wholesale-price forecasts.

Contained in its update shared last Thursday, Black Book first discussed its forecast based on its most likely economic scenario.

Analysts anticipate an average drop in wholesale prices of 17% during the remaining months of 2020 compared to pre-COVID-19 projections with larger drop occurring during the summer with some recovery in the fall.

To be more specific, Black Book’s short-term price outlook included an 18% drop for SUVs and light trucks and a 15% decline for cars.

Looking ahead to the summer and fall of 2023 with that most likely economic scenario in mind, Black Book said, “The effects of the pandemic will continue to be felt, but we project that values will return to the pre-COVID-19 baseline as used supply will decline because of cuts in retail and fleet sales in 2020 and 2021.”

Turning to its severe recession scenario, Black Book’s wholesale-price forecast is more negative.

Analysts see the potential for a 25% tumble in wholesale prices compared to a pre-COVID-19 baseline this summer and fall with a “very slow” beginning to recovery in 2021.

Specifically, that severe recession scenario has a 26% price plummet for SUVs and light trucks and a 22% price drop for cars.

Black Book closed with its longer-term projections for 36-month residual values under the severe scenario, saying, “The effects of the pandemic and recession will still be felt, and we project a 10% market level decline of wholesale prices as compared to pre-COVID-19 projections.”