Cox Automotive sees April used sales soften as wholesale prices tick higher

ATLANTA - 

Along with pinpointing what the Manheim Used Vehicle Value Index did in April, Cox Automotive experts also projected how much and why used-vehicle sales softened a bit last month.

According to Cox Automotive estimates, used-vehicle sales decreased by 2 percent year-over-year in April versus the same month last year. Analysts said the dip primarily stemmed as a result of having two fewer selling days.

Cox Automotive highlighted the annualized pace of used vehicle sales is up 1 percent over last year.

“We estimate the April used SAAR to be 39.7 million, the highest level in four months,” analysts said.

Cox Automotive mentioned April new-vehicle sales decreased, sliding by 5 percent year-over-year with two fewer selling days compared to April 2017. The April SAAR came in at 17.1 million, up from last year’s 17.0 million; it is the eighth straight month of more than 17 million SAAR and the fifth-best April SAAR on record.

Analysts added that cars continue to see sharp declines as sales in April fell 21 percent compared to last year, with major car segments’ having sales declines. They pointed out light trucks outperformed cars in April and were up 5 percent year-over-year.

Cox Automotive went on to note that the combined rental, commercial and government purchases of new vehicles climbed 7 percent year-over-year in April, led by increases in commercial (up 9 percent) and rental (up 7 percent) channels.

Analysts closed the discussion by saying new-vehicle inventories came in higher than 4 million units for the second straight month, and inventories are at their highest levels since June of last year.

Wholesale-price movements

Looking now at the wholesale space, Cox Automotive found that used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased 1.33 percent month-over-month in April. This movement brought the Manheim Used Vehicle Value Index to 132.5, which was a 6.3 percent increase from a year ago and the highest level since last November.

“Looking at trends in weekly Manheim Market Report (MMR) prices, the traditional spring bounce this year started three weeks later than it did in 2016 and earlier years and peaked in April in week 15,” analysts said.

“Used-vehicle prices are now moving down but remain higher now compared to where they were at the beginning of the year than any of the last three years,” they continued.

On a year-over-year basis, Cox Automotive noticed all major market segments saw price gains in April. Compact cars and vans outperformed the overall market, climbing by 6.6 percent and 13.3 percent respectively.

Meanwhile, the latest index update showed SUV/CUVs and pickups underperformed the overall market, rising by 5.8 percent and 4.8 percent, respectively.

“Collectively, nonluxury vehicles outperformed the market, while luxury vehicles underperformed,” analysts said. “This is not unusual for the spring, as the observed bounce occurs only in nonluxury vehicles.

Also in the wholesale space, Cox Automotive determined that rental risk pricing strengthened.

Analysts found that the average price for rental risk units sold at auction in April jumped 9 percent year-over-year. Rental risk prices moved 2 percent higher compared to March.

The report mentioned average mileage for rental risk units in April (at 43,500 miles) came in 10 percent above a year ago but 3 percent lower month-over-month. 

General economic update

Cox Automotive closed its latest analysis by highlighting the continued strong economic momentum on display in the U.S.

Analysts recapped that the economy grew 2.3 percent in the first quarter, a decline from last year’s overall growth of 2.5 percent, but much better than the first quarter of last year’s “lackluster” 1.2-percent growth.

Cox Automotive said the second quarter should see growth rebound in keeping with the expected 2.8 percent to 3.0 percent likely GDP growth for 2018.

Analysts added that consumer confidence rebounded in April after declining in March. The April index level was the second-best level going back to November 2000.

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