ATLANTA -

Perhaps contrary to dealers who do not have unlimited floor-plan availability, Cox Automotive chief economist Tom Webb said “wholesale pricing is not exceptionally high” even as the Manheim Used Vehicle Value Index moved higher for the fourth consecutive month.

Wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased in July by 2.3 percent, leaving the latest index reading at 127.0. It’s the highest point for the monthly reading in more than five years. The last time Manheim put its index mark at 127 or higher was June 2011, when it came in at 127.5.

“Although there was a near-universal expectation that wholesale prices would suffer in 2016 due to growing wholesale supplies, current auction values are not abnormal relative to several long-term historic relationships,” Webb said on Friday in his commentary that accompanied the latest Manheim index.

“Most notably, with respect to new-vehicle pricing (when looked at using both the new-vehicle consumer price index and average transaction prices), wholesale pricing is not exceptionally high,” he continued.

“Monthly payment differentials and other financing terms (such as the typical down payment) also support the current new/used price relationship,” Webb went on to say. “And, as is oft noted, narrowing margins mean that all of the increase in wholesale pricing is not being totally borne by the retail used-vehicle buyer.”

When taking a closer look at the six vehicle segments Manheim tracks to compile its monthly index report, Webb pointed out the weakness in compact car prices abated a bit in July. Prices for compact models decreased by only 1.4 percent in July, a fraction of what analysts spotted several times in the past few months when the drop would be several times that figure.

“Although compact cars remained the weakest of all the major segments over the past year, their pricing over the past three months outperformed the overall market,” said Webb, who again will be back as one of the experts at Used Car Week, which runs from Nov. 14-18 at the Red Rock Resort and Casino in Las Vegas.

“Modest price improvements and better inventory levels on the new-vehicle side helped,” he continued.

“Sports cars, pickups and mid- and full-size SUVs are the only segments with significant increases in wholesale pricing over the past year,” Webb added.

In July, prices for midsize cars edged lower by 0.2 percent. But prices in the other four segment climbed year-over-year, including luxury cars (up 1.6 percent), SUVs/CUVs (up 2.3 percent), vans (up 4.6 percent) and pickups (up 6.7 percent).

Also in the wholesale space, Manheim indicated that lower mileage and better mix drove rental-risk prices up in July.

“As was the case in June, a straight average of auction prices for rental risk units sold in July jumped substantially (up 21 percent) from a year ago because of significantly lower average mileage (down 21 percent) and a richer mix of units sold,” Webb said.

“After adjusting for mileage and broad shifts in the mix of market classes, rental risk prices were up less than 1 percent on both a month-over-month and year-over-year basis,” he added.

Recapping July retail sales

Elsewhere in his commentary, Webb mentioned information from the National Automobile Dealers Association that indicated total used retail unit volumes increased 5 percent in the first six months of the year with franchised dealers registering a 4-percent rise and independent stores generating a 7-percent lift.

“Preliminary numbers and channel checks indicate the gains continued in July,” Webb said.

“It is true that the streak of 27 consecutive quarters of same-store retail used unit sales gains by the seven public dealer groups came to an end in the second quarter of this year, but that was due to the high level of stop-sale units,” he continued.

“It is expected that the repair of those units will speed up as the third quarter progresses, and that will support further retail sales gains,” Webb added.

On the new-model side, Webb explained that five weekends and tactical incentives push July sales higher.

Webb noted new cars and light-duty trucks sold at a seasonally adjusted annual rate of 17.8 million in July.  That was up “considerably” from June’s 16.6 million pace and the first half rate of 17.1 million, according to Webb.

“We still consider the new vehicle environment to be relatively benign with respect to used vehicle values,” Webb said.

“Sure, incentive spending jumped at a double-digit pace in July, but much of it was tactical, and some of it was temporary.  And, more important, it worked,” he continued. “Both inventory levels and balance ended the month better than where they started.”