ATLANTA -

As new- and used-vehicle sales strengthened, the Manheim Used Vehicle Value Index for August showed that wholesale used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) declined for the fifth consecutive month.

The August reading slipped to 120.7, which is down 2.4 percent from a year ago. However, when looking month-over-month, Manheim chief economist Tom Webb acknowledged August’s decline at 0.4 percent was “substantially less than what occurred in each of the prior three months.

“A further downward realignment in wholesale prices would be consistent with current market conditions,” Webb continued. “But the adjustment will likely be less severe going forward, and prices will probably show periodic upticks along with the declines.

“As a historical perspective, note that wholesale prices are still up 24 percent from their trough in the fourth quarter of 2008 and down 6 percent from the record high reached in May 2011,” he went on to say.

Webb explained the latest index movement in light of August’s retail sales performance both on the new and used sides.

He recapped that new cars and light-duty trucks sold at a seasonally adjusted annual rate of 14.5 million in August, “which was healthy and slightly better than analysts expected.”

Webb noted that “Although several important vehicle models had significant incentive offerings in August, promotional spending for the overall industry was down, and average transactions prices were up.”

As far as used vehicles, Webb cited CNW Research data that indicated sales rose by 1.5 percent last month, fueled by growth in private-party transactions.

“Nevertheless, the ratio of total used-vehicle retail sales to new-vehicle sales was a high 2.8-to-1 in August, and dealers continued to enjoy profitable used vehicle operations,” Webb stated.

“Certified pre-owned vehicle sales reached their highest August level ever, even though the challenge of finding adequate qualifying inventory remained intense,” he added.

More Trends in Wholesale Pricing

Despite rising gas prices, Manheim indicated that residuals for compact and midsize cars continued to fall at a faster rate than overall market.

“That was a result of increased pressure from the new-vehicle market,” Webb surmised. “Compared to the overall market, compact and midsize cars have a larger share of their auction sales accounted for by late-model units, which are strongly impacted by new-vehicle incentives."

In August, Manheim found that wholesale pricing weakened noticeably for these models with significant model-year closeout programs in effect.

“Similarly, our ongoing analysis of changes in average mileage by price tier suggests that the greatest pricing strength has recently been for vehicles in the lower and middle price points — in other words, those less impacted by the new-vehicle market,” Webb explained.

Furthermore, Webb spotted that the average auction price for rental risk units slipped again in August, reflecting what he believes is the weakness in late-model used-vehicle pricing.

The average mileage for these rental risk units was also lower in August than in both July and a year ago, according to Manheim.

Finally, Manheim mentioned that mileage and seasonally adjusted prices for end-of-service midsize fleet cars declined for the fourth consecutive month in August. However, they remained above their year-ago level.

“As is typical this time of year, volumes were low,” Webb concluded.