Whether looking from the dealer perspective of used-vehicle prices for units running down the lanes or movements in depreciation that finance companies might consider, neither Manheim nor Black Book spotted dramatic shifts when analyzing their respective September data.
First, Manheim determined wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) remained unchanged between August and September, but non-seasonally adjusted prices declined 1 percent during the month. As a result, the Manheim Used Vehicle Value Index stood at 126.9 for September, an increase of 1.7 percent from a year ago.
“The strength in wholesale pricing is explained, in large part, by current and past increases in new vehicle transaction prices (even after adjusted for mix shifts),” Cox Automotive chief economist Tom Webb said in his commentary that accompanied the latest Manheim Index update.
“For example, the new-vehicle component of the Consumer Price Index (which further includes a quality adjustment) has increased by 1 percent over the past three years, and a straight average of new-vehicle transaction prices is up 9 percent since 2013,” Webb continued.
“As such, wholesale used-vehicle prices relative to new-vehicle prices are not out of line with historic norms,” he added. “Additionally, higher retail used-unit sales and stabilizing margins have kept dealers active bidders in the wholesale market.”
Meanwhile, according to Black Book data, the average price of a used vehicle for model years 2011 to 2015 depreciated by 2.3 percent during September, just slightly better than the August reading of 2.4 percent.
Black Book indicated that overall cars saw lower retention in September, ending the month at a 2.6 percent depreciation rate compared with 1.8 percent in August. Trucks as a whole finished with a depreciation rate of 2.0 percent in September.
Editors added that all vehicles are currently averaging a 12-month depreciation change of 16.6 percent.
“This past month all segments seemed to have retained their values slightly better than they did the previous month,” said Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics. “This is likely due to typical market fluctuation, however it appears as though some truck segments are beginning to feel more depreciation than in recent months.”
Deeper look at Manheim data
Manheim reported that all major car segments posted year-over-year price declines in September, while prices for all major truck segments moved higher.
Within cars, Manheim indicated the sporty segment was up “significantly.” Within the SUV/CUV segment, Manheim noted small entry units were “weak” while dipping by 4.4 percent, while prices for full-size units climbed by 6.5 percent.
Manheim went on to mention a straight average of dealer-consigned units had a 2.7 percent increase in auction prices and a 1 percent decline in average mileage.
Analysts said commercially consigned units had the same 1-percent decline in average mileage, but only a 1.6-percent increase in average selling price. A straight average of all auctions sales showed prices up more than 4 percent as a result of a higher share of commercially consigned units and a richer mix of vehicles.
Sliding over the off-rental market, Manheim explained rental risk offerings have lower mileage, better mix, and higher quality.
The average price of a rental-risk unit sold at auction in September reached a record high of a little more than $17,000.
“That record price was driven by lower mileage and a better mix of vehicles being sold in better condition,” Webb said. “Our index of rental risk pricing adjusted for mileage and broad market class shifts was down 1 percent for the month and year-over-year.
At 37,100 miles, Manheim also mentioned the average mileage of rental risk units sold at auctions was the lowest since November 2013.
“Relative to mix, midsize cars represented a significantly smaller share of September sales. Crossovers accounted for a much higher share,” Webb said.
In the third quarter of this year, Manheim pointed out vehicles with a grade of 4.0 or higher accounted for 42 percent of all rental risk sales. In last year’s third quarter, vehicles in that condition accounted for only 34 percent of sales.
Using the explanation of the “coming seasonal forces,” Webb closed his examination of the wholesale market with a couple of thoughts.
“The seasonal headwind to wholesale pricing has always been strongest from Labor Day to Thanksgiving,” Webb said. “And, statistics show that the seasonal pressure on wholesale pricing in October has not diminished over the past 20 years, even though new model introductions are increasingly scattered throughout the calendar year.
“Preselling the tax refund season with the use of down-payment deferral programs has, however, made both November and December relatively stronger pricing months than in years past,” he continued. “Indeed, in each of the past three years, November (which had historically been the weakest month for wholesale pricing) was slightly stronger than October, statistically speaking.”