Think about the old days for a second, Tom Kontos said. If there was a flood of cars from a certain segment (like off-lease) to hit the market, there wasn’t as many choices of business-to-business, competitive-bidding venues for the remarketing industry to sell those cars as there are today.

“In today’s world, with the embrace of multiple venues for selling cars, it helps mitigate the impact, to some degree, of an influx in supply that would normally put a lot of downward pressure on prices,” Kontos said in an interview with Auto Remarketing. “Now the cars can be, maybe, redistributed in various channels … there’s no flooding of the volume in one particular channel.”

In the introduction to the soon-to-be-released latest edition of the Pulse report from ADESA Analytical Services, Kontos writes about potentially increased new-car incentives and additional used-car supply growth adding more downward pressure on wholesale values.

Prior supply increases haven’t thrown off wholesale pricing too much so far, and Kontos doesn’t necessarily expect that to change this year.

“Balancing that downward pressure will be the continued embrace of upstream as well as traditional auction processes among remarketers, which will help dilute the usual negative impact of growing supply on wholesale values,” Kontos writes.

When asked about additional ways the remarketing industry is working to mitigate the impact of additional supply, he goes back to the additional sales opportunities and points this out: Even within the upstream venues themselves, there are “multiple iterations” of opportunity.

First, Kontos said, you could sell the car to the grounding dealer. Then, you can offer it to other dealers. And then make it an open sale.

Having these options opens the door to redistributing the inventory to other areas, so that not all of the inventory is concentrated in one specific corner of the country, Kontos said.

He goes on to note that “the other alternative would be to say, ‘OK, well, rather than try to draw the buyer into an upstream channel that allows them to bid on the car remotely, maybe what I should do is move this car physically to a different part of the country.’

“So, that’s kind of the old way of doing things, but it’s still tried and true, and it does work,” Kontos said.

Mix of vehicles

In the executive summary portion of the Pulse report, Kontos touches on the mix of wholesale consignment and how that has impacted and may continue to affect pricing.

“Just as new-vehicle sales growth was driven by trucks, which were in turn supported by low gasoline prices, wholesale used-vehicle price growth was concentrated in the van, SUV and pickup truck model class segments.  Much of the year’s headline price trends were biased upward by a shift in sales to higher value off-rental and off-lease units, which masked underlying softness in the wholesale market arising from greater supply,” Kontos wrote.

“As that ‘richer mix’ reached a steadier state, wholesale prices fell to levels comparable or below those of the prior year,” he added. “In short, though retail demand has done an outstanding job of helping the wholesale market absorb incoming supply without dramatic reductions in price, this will be cumulatively a greater challenge going forward.”

Auto Remarketing asked Kontos about the market leaning towards those higher-value off-lease and off-rental units, and what he anticipates the mix to be like this year.

Kontos expects the mix to look much like it did in 2015. There should be less year-over-year change than there was last year.

The only caveat would be, “that we did have an influx of cars that were recalled in 2014, and they were held up for sale later on, and so they ended up selling in 2015,” he said.

“We won’t have that little anomaly, I don’t think, this year,” Kontos said. “So, that might change things a bit in the mix … If last year we saw a bit more off-rental program cars in high concentration in the first half of the year that would have sold in 2014, we won’t have that kind of anomaly in the data this year. But we will definitely see a mix that’s similar to last year in terms of younger, higher-dollar cars that are coming off lease or coming off rental.”

In essence, a similar mix, but with some differences in timing, Kontos said.

Among other consignment segments — including repossessions, rentals, lease, commercial fleet and dealer consignment — you can expect volumes to have a “general tendency to be higher” year-over-year, to varying degrees, Kontos said.