ATLANTA -

Thanks to wholesale prices for highly sought-after, slim-profit margin compact cars moving higher, the Manheim Used Vehicle Value Index just keeps climbing.

Yet again, the May reading set a new index record as the level soared to 127.8, representing a 5.6-percent increase from the year-ago level.

Manheim pointed out the index now has reached a new record three times this year. Previous highs were established in January and April.

“In recent months, the natural limit to which used-vehicle values can rise has been increased by higher transaction prices and leaner inventories in the new-vehicle market,” Manheim’s Tom Webb explained Tuesday.

“In addition, wholesale auction supplies have remained constrained as a result of lower commercial consignments,” Webb continued.

“The demand for used vehicles in the retail market remains healthy, but the falling pace of new vehicle sales (which begets used vehicle transactions) and the slowing economy are dampening actual used-vehicle sales,” he went on to say.

Auction Prices for Compact Cars Soar

On a mileage-adjusted basis, Manheim tabulated that compact car prices in May shot up more than 20 percent from their year-ago level.

“The annualized price-rise accelerated even further over both the last six months and the past quarter,” Webb surmised.

“This reflects inventory shortages in the new-vehicle market, the impact of higher pump prices, a shift in consumer preferences beyond what gas prices would suggest and better product offerings in this segment,” he continued.

Manheim noticed May’s price for midsize cars increased by double digits, too. Webb indicated this segment is 14.4 percent higher than a year ago.

Two other segments that Manheim tracks eked out price gains in May as well as. Luxury cars were up 1.1 percent and vans ticked 1.3 percent higher.

Likely reflecting fuel costs, pickup prices as well as prices for SUVs and CUVs dipped in May, according to Manheim. Pickups were down 4.0 percent while SUVs and CUVs were off even more — 5.8 percent to be exact.

Rental Risk Vehicles Command Exceptionally Strong Prices

Elsewhere in Manheim’s assessment of the May wholesale market, Webb pointed out a straight average of auction prices for rental risk units remained above $14,500 for the third consecutive month.  Webb believes this level is the result of better product offerings, reduced supplies and strong demand for these units.

“The reduced availability at auction stemmed from the 21-percent decline in new-vehicle sales into rental during the month, according to Bobit Business Media, while at the same time, the total rental fleet size was growing,” Webb explained.

Manheim also mentioned the average mileage of rental risk units sold at auction moved above 40,000 miles in May.

“In the second half of 2011, we expect the volume of off-rental units will rise and, in the near term, so too will the average mileage,” Webb shared.

Fleet Managers Enjoy Higher End-of-Service Prices

Moving along, Manheim noted the seasonally and mileage-adjusted auction price for end-of-service midsize fleet cars reached a new high in April and dipped only marginally in May to rest at its second-highest level ever.

“And, although prices for pickups have been soft in the overall wholesale market, those being sold by commercial fleets have enjoyed higher prices recently,” Webb stated.

“In some instances, fleet managers have taken this opportunity to cycle out early, especially when attractive pricing is offered for replacement units,” he went on to say.

Used- & New-Vehicle Retail Sales

As he often does when sharing details about the current Manheim Used Vehicle Value Index, Webb delved into both used- and new-vehicle sales performances during the month.

Webb first noted CNW Research data that revealed May’s total used-vehicle retail sales slipped 1.4 percent from their year-ago level.

He reinforced the assessment by CNW president Art Spinella that sales at independent dealerships fell 4.4 percent, “as a result of increased competition from franchised dealers who were trying to offset the impact of lower new-vehicle inventories and the reduced availability of vehicles in their desired price point at auction.”

However as Webb referenced, total dealer transactions were down a mere 0.9 percent in May as used-vehicle sales at franchised dealers increased 2.8 percent during the month.

Turning over to new vehicles, Webb mentioned the seasonally adjusted annual pace of new-vehicle sales through the first four months of 2011 was above 13 million. In May, however, he pointed out the pace slipped below 12 million as “inventory shortages took a toll on major Japanese nameplates.

“Tight inventories across the board also led to lower fleet deliveries, reduced incentives and higher retail transaction prices,” Webb continued.

“This environment in the new-vehicle market — which is supportive to used-vehicle values — is expected to persist for several more months,” he concluded.