The wholesale price movement both Manheim and Black Book spotted to round out 2018 continued into their analysis of January data.
Beginning with Manheim, the company determined wholesale used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) decreased 1.62 percent month-over-month in January, representing a softening for the third month in a row. This move brought the Manheim Used Vehicle Value Index to 135.4, a 3.3-percent increase from a year ago.
“Looking at trends in weekly Manheim Market Report (MMR) prices, January saw a continued price depreciation trend similar to what we saw at the end of last year,” analysts said in a commentary that accompanied the latest information.
They continued by saying, “3-year-old vehicle values in aggregate depreciated at a faster pace than normal, especially for the beginning of the year. Mix shifts can be more pronounced in the first few weeks of the year, which makes it more difficult to determine a clear directional trend.”
On a year-over-year basis, most major market segments saw seasonally adjusted price gains in January. The only segment that didn’t follow that path was luxury cars, which saw their prices tick 0.3 percent lower.
The other five segments analysts track experience price rises in January, including:
— Compact cars: Up 3.6 percent
— Midsize cars: Up 5.4 percent
— Pickups: Up 2.4 percent
— SUV/CUV: Up 2.5 percent
— Vans: Up 1.4 percent
“As was the case throughout 2018, more affordable vehicles continued to see the greatest increase in values in January,” Manheim analysts said. “Compact cars and midsize cars outperformed the overall market, while utility vehicles and pickups underperformed the overall market.”
Manheim closed its latest update by mentioning price strengthening in the rental risk space.
Analysts noted the average price for rental risk units sold at auction in January was up 3.5 percent year-over-year. Rental risk prices were up 0.2 percent compared to December.
Manheim went on to mention average mileage for rental risk units in January (at 47,000 miles) was up 5 percent compared to a year ago and down 3 percent month-over-month.
Analysis from Black Book
Turning next to Black Book’s analysis, editors released their Used Vehicle Retention Index for January, indicating the reading came in at 115.4. That figure represented a dip of 0.7 percent from December’s listing of 116.3.
Black Book pointed out the index has now declined two months in a row.
Editors found that the index decline was nearly across the board for almost all segments with only compact and mid-size cars showing modest gains, up just 0.11 percent and 0.03 percent, respectively.
Black Book acknowledged there were a number of segments with declines of more than 1.0 percent, including minivans, small pickups, mid-size and full-size luxury CUV/SUVs, sporty cars, sub-compact cars, near luxury cars and compact crossover SUV.
“After a strong performance in 2018, the Index has now declined for two straight months. We believe this could be a pre-cursor to a 2019 market that may show slightly larger depreciation overall compared with that in 2018,” said Anil Goyal, Black Book’s executive vice president of operations.
“It is interesting to note that used sedans are still in demand highlighting the affordability concerns of vehicle ownership,” Goyal continued.
The Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on 2- to 6-year-old used vehicles as percent of original typically-equipped MSRP. It is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage and condition.
The index dates to January 2005, where Black Book published a benchmark index value of 100.0 for the market. During 2008, the index dropped by 14.1 percent while during 2016, the index fell by just 6.4 percent.
During 2011, the index rose strongly from 113.3 to 123.0 by the end of the year as the economy picked up steam and used vehicle values rose higher. It continued to remain relatively stable, rising slightly until May of 2014 when it hit a peak of 128.1.
To obtain a copy of the latest Black Book Wholesale Value Index, go to this website.