Make it six months in a row that the Manheim Used Vehicle Value Index has set a new record high.
Cox Automotive reported this week that wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased 1.02 percent month-over-month in October. This rise pushed the index reading to 136.3, which was a record high for the sixth consecutive month and an 8.1-percent increase from a year ago.
On a year-over-year basis, all major market segments again saw gains, including midsize cars. SUVs/CUVs, pickups and vans, which outperformed the overall market with increases of 8.8 percent, 11.7 percent and 9.2 percent, respectively.
“Though wholesale market values continue to show strength as a result of growing retail demand, most of this price strength can be attributed to the recovery following Hurricane Harvey and Hurricane Irma,” Cox Automotive chief economist Jonathan Smoke said in commentary that accompanied the index update.
“Replacement demand combined with a reduction in available supply has caused wholesale inventories to tighten,” Smoke continued. “The impact to the wholesale market was widespread, resulting in abnormal wholesale price gains for another month.”
The last time the index generated an upward march this long came at the end of 2011 into the first part of 2012. That’s when the reading went from 122.8 in October 2011 up to 126.2 in March 2012.
As they were then, used vehicles now are rolling over the curb at a good clip.
According to Cox Automotive estimates, used-vehicle sales improved by 3 percent year-over-year in October. The October used SAAR decreased to 39.7 million units from September’s 41 million.
Smoke indicated the retail growth in used sales is coming from vehicles less than 4 years old, which have grown 14 percent year-over-year, year-to-date.
Vehicles less than 4 years old represent the largest age segment of vehicles in the used-car market,” he said.
And one other note on the wholesale market, Cox Automotive reported that rental risk pricing improved in October, as well.
The average price for rental risk units sold at auction in October was up 4 percent year-over-year. Rental risk prices were down 3 percent compared to September.
Cox Automotive added that average mileage for rental risk units in October at 42,500 miles was 1 percent above a year ago.
Smoke wrapped up his analysis by noting the U.S. economy “continues to chug along.”
Smoke relayed that the first estimate of real GDP growth in the third quarter came in at 3.0 percent, beating expectations of 2.6 percent growth.
“Two consecutive quarters of 3 percent or greater growth is a positive improvement, as we have not seen two such strong quarters in a row since mid-2014,” Smoke said. “After declining in September, consumer sentiment rebounded in October, with the final reading from the University of Michigan coming in at 100.7, its highest level since the start of 2004.
“Households are feeling more upbeat about the outlook for the U.S. economy, which is a solid leading indicator of consumer spending and the rest of the economy in the fourth quarter,” he went on to say.