The Manheim Used Vehicle Value Index is now in unchartered territory.
The team at Cox Automotive reported on Monday that wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased 2.01 percent month-over-month in August. That jump pushed the index reading to 139.7, which is 6.4 percent higher than a year ago and the highest level for the series over its more than 20-year history.
While not a record, RVI Group reported wholesale price increases on Monday, too.
In the United States, the RVI Used Vehicle Price Index Pre-Release was 1.085 in August compared to 1.057 in July and 1.026 in August of last year. The metrics represented an increase of 2.7 percent month-over-month and an increase of 5.7 percent year-over-year.
The updates from Manheim and RVI Group arrived on the heels of Black Book saying that its index posted the largest single-month increase in seven years.
“The strange summer price appreciation in used cars is partly a function of a strong economy at its peak, with mounting affordability challenges for the consumer that favor growth in used-vehicle sales at the expense of new,” Cox Automotive said in its report that accompanied the latest Manheim index update. “These conditions have supported strong used-vehicle prices for over a year.
“A key factor behind the vehicle appreciation this summer is the fear of import tariffs’ leading to higher prices in the future,” analysts continued. “In addition, consumers are also worried about higher interest rates in the months ahead.
“Combined, these trends encourage buying sooner rather than later. The increase in demand has not been satisfied by flattening wholesale supply and has led to faster moving retail inventory, higher sales efficiency at auction and higher prices,” Cox Automotive went on to say.
Looking at trends in weekly Manheim Market Report (MMR) prices, the abnormal summer bounce that started in June continued in August. As of Labor Day, 3-year-old vehicles are now worth 4.8 percent more than they would normally be worth had typical depreciation occurred instead of the appreciation observed this year, according to Cox Automotive.
On a year-over-year basis, Cox Automotive indicated most major market segments saw price gains in August, but more affordable vehicles are seeing the greatest increases in values.
Analysts added compact cars and midsize cars outperformed the overall market, while vans, utility vehicles and pickups underperformed the overall market.
Also of note, Cox Automotive mentioned that rental-risk pricing strengthened, too.
Analysts determined the average price for rental risk units sold at auction in August was up 8 percent year-over-year. Rental risk prices were up 4 percent compared to July.
The report pointed out that the average mileage for rental risk units in August (at 43,500 miles) was up 4 percent compared to a year ago but down 4 percent month-over-month.