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The used-car market is finally showing signs of improvement. Wholesale prices rose in May for the fifth month in a row and showed the first year-over-year gain in pricing since the end of 2007.
The Manheim Used Vehicle Value Index now stands at 109.1. It measures prices adjusted for mix, mileage and seasonality.
Wholesale prices reflect dealer demand and auction supply.
CNW Marketing Research reports retail used vehicle sales were up almost 8 percent in May on a year-over-year basis. Certified used vehicle sales in May were up 8.9 percent over April, though down by 11.3 percent from last May’s all-time high, according to Autodata Corp.
Supply continues shrinking.
ADESA Analytical Services estimates auction industry inventory levels stood at approximately 37 days at the end of May. That’s much lower than the 73 days around December and equal to levels last May.
Trucks and SUVs showed strong year-over-year improvements as a class. Gas prices started heir meteoric rise last spring, depressing values.
Minivans continued a surprisingly robust market.
Minivan pricing continued to be at its highest level surpassing May 2008 levels by 21 percentage points, according to online wholesaler OpenLane.
All segments saw higher prices, said Terrence Wynne, director of data services for the NADA Used Car Guide. But he doubts this will continue.
The trends we are seeing now are fragmenting or splintering.
“There continues to be significant volatility driven, in this case, by prices moving in opposite directions at the age, brand and model levels, not the typical segment type of price movement,” Wynne said. “This might suggest that the market is in transition.”
Questions continue surrounding the economy’s recovery. There’s some concern the federal government’s large spending increases will bring increased taxes and higher inflation.
Another concern is how soon the employment outlook will improve.
Nonfarm payroll fell by 345,000 in May, pushing the unemployment rate above 9 percent. But the decline was about half the monthly average of the past six months, according to the Bureau of Labor Statistics.
Consumers see a brighter future, or at least a less gloomy one. The Conference Board’s Consumer Confidence Index rose to 54.9 from 40.8 in April.
That helps used-car sales, said Tom Webb, Manheim’s chief economist. So does looser credit.
“The consumer's ability to buy has been helped by the greater availability of retail financing,” Webb said. “In particular, many lenders have been willing to advance larger loan amounts for a given vehicle.”
Auto loan acceptance still has a long way to go, according to Paul Taylor, chief economist for the National Automobile Dealers Association.
“Credit is becoming more available, but not as rapidly as we’d like and it’s by no means back to normal,” Taylor said.
Used-car buyers remain a vulnerable grew, with lower incomes and less savings. Most dealers report low limits on how much consumers will pay for vehicles.
“There continues to be this disparity between the wholesale and retail channels,” Wynn said. “The wholesale price strength continues to erode margins between wholesale and retail because the premiums are not translating to the retail market.” |
