A “turning point.”

That’s how AutoIMS described the third quarter for the wholesale auto industry, which hit a few “firsts” in certain consignment metrics included in the company’s Industry View report.

The report, released quarterly, is a “compendium of metrics featured in the AutoIMS Sales Scorecard that reflects the AutoIMS database (with a few needed exclusions) — a vast majority of the commercial sales volume at wholesale auto auctions in North America.”

One of the positive shifts in the AutoIMS data happened in August when wholesale vehicle sales volume climbed more than 10% — the first year-over-year bump since April 2021, the report said.

Wholesale sales volumes were also up year-over-year in September, though to a lesser degree than August.

But there were several signs of “cooling of the wholesale market,” AutoIMS said.

For example, conversion rates, which came in at 58.76% for Q3. They ended the quarter on the downslope, whereas during the same period of 2021, they were on the the upswing.

“Last quarter’s data indicated a cooling of the wholesale market, in concert with a cooling economy,” AutoIMS said in the report.

“As those trends continue, the metrics this quarter indicate more of a turning point. The consistently lower conversion rate all year just broke its parallel track against last year by turning downward over the last month.”

And consider average sale prices, which had been beating 2021 numbers all year. That is, until late in the quarter, when they slipped below year-ago figures.

“Floor price achievement followed suit, averaging more than 2.5% lower YoY,” AutoIMS noted. “In context with the appearance of higher grade, later model year, lower mileage vehicles, these turns are more severe than they appear.”

Amid all this, average damage estimates came in at $2,386.69 in Q3, up from $1,946.94 a year ago. AutoIMS pointed out that average auction fees had been lower than 2021 figures all year until July, and finished the quarter at $393.95, up from $379.47 in Q3 2021.This points to “more investment in recon,” AutoIMS said.

“With more recon and more vehicles inevitably arriving at physical auction, days-to-sell is increasing, too,” the company said. “Anecdotally, commercial consignors continue a very active year automating manual processes, tapping into valuable third-party connections, and building creative tools that improve the bottom line.”

Cox Automotive chief economist Jonathan Smoke provided a breakdown of expected annual wholesale volumes by consignment type during a conference call with the industry and media in early October.

Starting with repossession volumes, which after two years of declines, is expected to tick up to 1.2 million in 2022 and remain at that level in 2023 before climbing to 1.3 million in 2024 and 1.5 million in 2025. That’s still lower than 2019 numbers, when repo volume in wholesale reached 1.7 million before dropping to 1.1 million by 2021.

Next up was off-lease volumes, which has been the biggest contributor to overall volumes declines. After reaching 2.5 million units in both 2018 and 2019 and remaining relatively steady at 2.4 million units in 2020, off-lease volume was cut in half during 2021 at 1.2 million units.

Volumes are expected to tank this year at 400,000 units, where they’ll likely stay in 2023 before climbing to a still low 600,000 in 2024 and 1.0 million in 2025.

Commercial consignment overall reached a “bottom” in the middle of this year, Smoke said in another industry call in late September.

“What really caused the wholesale market to dramatically collapse at the beginning of the pandemic was the rental activity, but then we very quickly moved because of the rise in vehicle values to the biggest source of decline was leased vehicles no longer showing up at auction, because they were increasingly being bought by the consumer … or by the grounding dealer because of the positive equity and the strong pricing dynamics that simultaneously gave them a unit to retail, plus a boost to margins.

“Well, the average equity position of lease vehicles remains around $6,000 in the positive, when historically they tended to be negative because of lease subvention. And so that means that dynamic continues and is alive and well,” he said.

As such, the percent of end-of-term leases that go back to the finance company will likely reached a record low, when it typically is north of 60%, Smoke said.

Black Book looked at vehicle consignment trends as well in its latest Market Insights report, which examined last week’s wholesale auction market.

Reporting that “inventory is still available and consistent,” Black Book noted that, “There are still minimal signs of flood vehicles coming through, but announcements of flood vehicles from the recent hurricane are expected. In addition, with vehicle delinquencies increasing, an uptick in repossessions may make their way to auction lanes soon.

“Some model-year 2023 vehicles are popping up in the lanes, which is no surprise as more model year 2024 launches and vehicle announcements are coming out,” Black Book said. “Newer used vehicles (model-year 2018 to model-year 2020) values seem to be slightly increasing, although overall, wholesale values are continuing to decline.”