Just like cream and sugar cuts the bite of strong coffee, KAR Auction Services chief economist Tom Kontos noticed wholesale price movements of cars versus trucks unfolded similarly in February to produce the overall reading.
And the movements happened in part to what’s occurring “upstream” versus “downstream.”
According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, wholesale used-vehicle prices in February averaged $10,775. The reading represented an uptick of 0.1 percent compared to January and 0.6 percent relative to February of last year.
On average, Kontos explained that car segment prices were down both month-over-month and year-over-year, while the opposite was true for trucks.
Average wholesale prices were relatively flat in February, as opposing forces largely canceled each other out,” he said in his latest installment of the Kontos Kommentary.
“To be more specific, overall car price declines were more than offset by truck price gains, and off-lease price strength was largely offset by softer prices elsewhere,” Kontos continued. “Within the off-lease segment, the ‘take-rate’ of midsize cars purchased upstream may be higher than that of midsize SUV/crossovers, which is leaving fewer late-model midsize cars in the lanes and an abundance of midsize SUV/crossovers.”
To illustrate his assertions further, Kontos went back to a main part of his monthly updates — examining fleet/lease sales of 3-year-old midsize sedans and midsize SUV/crossovers with less than 45,000 miles.
“When holding constant for sale type, model-year age, mileage, and model class segment — using criteria that characterize off-lease units — prices were up significantly on a year-over-year basis for midsize cars but down significantly for midsize SUV/CUVs,” Kontos said.
Prices for those specific cars jumped $411 to $11,967 while prices for those particular utilities slid by $471 to $20,102.
“A possible explanation for the strength of off-lease midsize car prices is that more off-lease cars are being bought ‘upstream,’ that is, in online-only sales from dealer lots and marshalling yards,” Kontos said. “So, auctions may be seeing a relative scarcity of late-model midsize cars.
“On the other hand, there may be an abundance of midsize trucks at auction as more of these vehicles are making it ‘downstream’ to physical auction lots,” he continued.
Kontos went on to mention average wholesale prices for used vehicles remarketed by manufacturers in February rose 1.7 percent month-over-month but dropped 1.8 percent year-over-year.
He noted prices for fleet/lease consignors ticked 0.4 percent lower sequentially but jumped 4.6 percent year-over-year.
Furthermore, Kontos said average prices for dealer consignors in February edged 0.4 percent versus January and 0.3 percent relative to February of last year.
Kontos closed his analysis by looking at used-vehicle deliveries based on National Automobile Dealers Association data. Retail used-vehicle sales by franchised dealers, and independent dealers each increased 4.0 percent year-over-year in February.
|Febuary 2019||January 2019||February 2018||Prior Month||Prior Year|
|Total All Vehicles||$10,775||$10,761||$10,707||0.1%||0.6%|
Source: ADESA Analytical Services.