Kontos uncovers telling price data on ‘2 bellwether model classes’

CARMEL, Ind. - 

While determining that overall April wholesale prices moved higher both sequentially and year-over-year, KAR Auctions Services chief economist Tom Kontos drilled deeper into the latest data, focusing on what he called “two bellwether model classes.”

And what he found tells a much different story about what happened in a particular pocket of the wholesale space last month.

First, let’s get to the overall metrics. According to ADESA Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale used vehicle prices in April averaged $11,141 — up 2.2 percent compared to March and up 2.5 percent relative to April of last year.

Kontos mentioned that compact, midsize and luxury cars all showed year-on-year price declines of 2.0 percent or more, while most of the truck segments registered significant year-over-year gains.

“Average wholesale prices in April were up on both a month-over-month and year-over-year basis,” he continued in his latest Kontos Kommentary. “As has been stated repeatedly in previous months, however, much of these supposed increases in used vehicle values are the result of strength in truck prices and growth in off-lease volumes. 

“An analysis of sales prices by sale type, model-year age, mileage and model class segment reveals that prices actually fell in April on both a month-over-month and year-over year basis for two bellwether model classes,” Kontos said. “This drill-down is more reflective of the downward pressure of supply growth on used vehicle values.”

Kontos found that when he broke the data down by age, he noticed that prices softened 1.3 percent for 3-model-year-old units; what he considers to be a good proxy for off-lease units. Here is what else Kontos discovered:

—Prices for midsize cars in this age range dropped by $744 or 6.3 percent year-over-year from $12,459 to $11,715

—Prices for midsize SUVs/CUVs in this age range dipped by $753 or 3.6 percent year-over-year from $20,945 to $20,192

“These results are based on holding constant for sale type, model-year age, mileage and model class segment,” Kontos said. “Midsize cars and midsize SUVs/CUVs are among the highest-selling model classes at auction and are good benchmarks for overall market performance.”

Looking at other portions of KAR’s latest information showed that average wholesale prices for used vehicles remarketed by manufacturers ticked up 2.5 percent month-over-month and 3.7 percent year-over-year.

Analysts also noticed prices for fleet/lease consignors edged 1.5 percent sequentially and 3.2 percent annually. 

Furthermore, the company mentioned average prices for dealer consignors climbed 5.1 percent versus March and 3.9 percent versus April of last year.

As previously reported by Auto Remarketing, Kontos closed his latest analysis by noting April certified pre-owned sales information from Autodata Corp., which indicated April sales inched up 0.7 percent year-over-year but softened a bit sequentially (down 3.6 percent).

Kontos discussed the market further in the video available here and at the top of the page.

ADESA Wholesale Used-Vehicle Price Trends
   Average  Price  ($/Unit)  Latest  Month Versus
   April 2017  March 2017  April 2016  Prior Month  Prior Year
 Total All Vehicles  $11,141  $10,904  $10,866  2.2%  2.5%
 Total Cars  $8,968  $8,921  $9,044  0.5%  -0.8%
 Compact Car  $6,805  $6,732  $7,003  1.1%  -2.8%
 Midsize Car  $7,962  $8,006  $8,127  -0.6%  -2.0%
 Full-size Car  $8,504  $8,346  $7,860  1.9%  8.2%
 Luxury Car  $13,317  $13,235  $13,828  0.6%  -3.7%
 Sporty Car  $14,694  $14,131  $14,415  4.0%  1.9%
 Total Trucks  $13,187  $12,825  $12,819  2.8%  2.9%
 Minivan  $9,060  $9,012  $8,582  0.5%  5.6%
 Full-size Van  $13,005  $13,009  $13,457  0.0%  -3.4%
 Compact SUV/CUV  $11,083  $10,894  $11,033  1.7%  0.5%
 Midsize SUV/CUV  $11,773  $11,455  $11,619  2.8%  1.3%
 Full-size SUV/CUV  $14,085  $13,421  $13,221  4.9%  6.5%
 Luxury SUV/CUV  $19,055  $18,343  $19,121  3.9%  -0.3%
 Compact Pickup  $9,326  $8,793  $8,674  6.1%  7.5%
 Full-size Pickup  $16,520  $16,142  $15,903  2.3%  3.9%

Source: ADESA Analytical Services.

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