Kontos highlights 2 factors that kept May wholesale prices from dropping significantly

CARMEL, Ind. - 

KAR Auction Services chief economist Tom Kontos pointed out two specific reasons why May wholesale prices registered only a “modest” move lower year-over-year.

According to ADESA Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale used-vehicle prices in May averaged $11,114. That figure was flat compared to April and down a “modest” 0.2 percent relative to May of last year, according to Kontos.

The latest installment of the Kontos Kommentary released on Monday also mentioned that average prices softened on a year-over-year basis for both cars and trucks, with mostly month-over-month declines for cars and mostly month-over-month increases for trucks.  Kontos spotted a notable exception among the truck classes was the compact SUV/CUV segment, “which showed a seasonal decline perhaps reflective of the fact that these vehicles are starting to return to the wholesale market in larger numbers after several years of strong new-vehicle sales.”

Kontos also recapped that average wholesale used vehicle prices registered their third consecutive year-over-year price decline in May.

“However, prices were again seasonally strong, and retail used vehicle sales were solid, especially for independent used-vehicle dealers,” he said. “Wholesale prices remain strong for off-lease vehicles, which, as noted last month, is testimony to the effectiveness of upstream sales in preventing oversupply of these units at physical auctions.”

To reinforce that assessment, Kontos again shared metrics for two specific segments that are 3 years old with less than 45,000 miles.

When holding constant for sale type, model-year age, mileage, and model class segment, prices were up on a year-over-year basis for both midsize cars and midsize SUV/CUVs. Midsize car prices rose 3.5 percent or $408 to $11,943, while midsize SUV/CUV prices climbed 2.6 percent or $538 to $20,858.

“As noted last month, this analysis indicates that wholesale values for off-lease units are holding up well despite the overall softening market trend and is evidence of the effectiveness of new remarketing approaches in redistributing supply into various sales channels and geographically,” Kontos said.

Kontos relayed other ADESA information from May that showed average wholesale prices for used vehicles remarketed by manufacturers were down 2.0 percent month-over-month and up 5.7 percent year-over-year.

Prices for fleet/lease consignors ticked up 0.8 percent sequentially and 6.8 percent annually.

Average prices for dealer consignors dipped 1.5 percent versus April and 3.2 percent relative to last May.

Finally, Kontos closed with data from the National Automobile Dealers Association that indicated retail used-vehicle sales by franchised dealers slipped 1.5 percent year-over-year in May but climbed 2.4 percent for independent dealers.

He added that May certified pre-owned sales were up 12.5 percent from the prior month and up 4.8 percent year-over-year, according to figures from Autodata.  On a year-to-date basis, CPO sales are up 2.2 percent versus last year.               

Kontos elaborated more about the wholesale market in a video available here as well as at the top of the page.  

ADESA Wholesale Used-Vehicle Price Trends

   Average  Price  ($/Unit)  Latest  Month Versus
   May 2018  April 2018  May 2017  Prior Month  Prior Year
 Total All Vehicles  $11,114  $11,116  $11,1401  0.0%  -0.2%
 Total Cars  $8,662  $8,778  $8,955  -1.3%  -3.3%
 Compact Car  $6,483  $6,562  $6,836  -1.2%  -5.2%
 Midsize Car  $7,626  $7,701  $7,967  -1.0%  -4.3%
 Full-size Car  $7,845  $7,753  $8,395  1.2%  -6.5%
 Luxury Car  $13,304  $13,474  $13,767  -1.3%  -3.4%
 Sporty Car  $14,453  $14,625  $14,310  -1.2%  1.0%
 Total Trucks  $13,200  $13,139  $13,247  0.5%  -0.3%
 Minivan  $9,939  $9,901  $9,117  0.4%  9.0%
 Full-size Van  $13,636  $13,807  $13,360  -1.2%  2.1%
 Compact SUV/CUV  $11,051  $11,096  $10,877  -0.4%  1.6%
 Midsize SUV/CUV  $11,449  $11,425  $11,860  0.2%  -3.5%
 Full-size SUV/CUV  $14,291  $13,878  $14,077  3.0%  1.5%
 Luxury SUV/CUV  $18,678  $18,645  $19,321  0.2%  -3.3%
 Compact Pickup  $9,422  $9,407  $9,368  0.2%  0.6%
 Full-size Pickup  $16,278  $16,137  $16,778  0.9%  -3.0%

Source: ADESA Analytical Services.

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