ATLANTA -

The Manheim Used Vehicle Value Index continued a return toward the all-time high reached last May.

February’s reading came in at 125.8 as the index of mix-, mileage-, and seasonally adjusted wholesale prices is now up 1.8 percent year-over-year and off only 1.6 percent from the all-time high mark of 127.8.

The index now has ticked higher for four consecutive months after softening slightly during late summer and early fall of last year.

“All of the increases in wholesale prices in February came in the second half of the month,” Manheim chief economist Tom Webb explained Wednesday. 

“New and used vehicle sales numbers showed that the retail market also accelerated as the month progressed,” he continued.

Breaking down the year-over-year price increase by vehicle segment, four of the six Manheim tracks moved higher, led by compact car prices creeping 6.3 percent higher.

The other three moving up included midsize cars (up 3.5 percent), as well as pickups and vans (each up 0.5 percent).

Luxury car prices sunk 1.4 percent in February, according to Manheim, while prices for CUVs and SUVs dropped the most at 4.1 percent.

Off-Rental: High Prices, High Volume and High Mileage

Webb pointed out that as new-vehicle sales into rental fleet have increased by more than 25 percent during the first two months of the year, the situation means the number of units coming out of service also is growing. 

“The higher volume did not prevent prices from reaching near-record levels, despite near-record average mileage at time of sale,” Webb indicated.

Webb also noted that end-of-service fleet units also posted higher prices and higher volume.

“Mileage- and seasonally adjusted prices for midsize cars coming out of fleet service reached a record high in February,” Webb surmised.

“This was also true for many other segments of commercial fleet units, except cargo vans, which showed a lot of variance depending vehicle specifications and condition,” he added.

New and Used Sales on a “Joy Ride”

After discussing the wholesale market, Webb turned his attention to retail sales, a segment he said was going on a “joy ride.”

The Manheim economist recapped that new cars and light-duty trucks sold at a seasonally adjusted annual rate of 15.1 million in February.

“This far exceeded the estimates made by all of the daily tracking firms right up until the final release date,” Webb insisted.

“And, as in recent months, sales gains were not built upon incentives. In fact, incentive spending continued to track down on a year-over-year basis,” he continued.

“With sales exceeding manufacturer expectations, plant utilization high, and even some backlogs in the supplier industry, there is no reason to expect a near-term return to high incentives,” Webb projected.

As he mentioned earlier, Webb pointed out fleet deliveries were high in February as sales to commercial fleets rose 28 percent, and purchases by rental car companies increased 21 percent.

“But that still left retail sales up a healthy 11 percent for the month,” Webb emphasized.

“New vehicle sales into rental in February were split among a wide mix of makes and models,” he continued. “And, off-rental volumes and average mileage suggest that the purchases reflected needed replacements.

“As such, we do not believe that today’s higher sales into rental will have a depressing effect on future residuals,” Webb went on to say.

Moving over to the used side of the retail business, Webb highlighted that used-vehicle retail sales also climbed during February. The increase came in at more than 10 percent with the pace accelerating at month end. 

“Preliminary numbers and conversations with dealers suggest that front-end gross margins showed normal seasonal improvement and that already-high back-end incomes continued to rise,” Webb stated.

Gas Price Discussion

Webb wrapped up his commentary with the release of the Manheim Index by sharing his thoughts on how fuel costs are influencing the market.

“Higher gas prices affect model selection, but not decision to buy — for now,” Webb cautioned.

“Rising gas prices were of increasing concern in February — at least as far as the press goes,” he continued. “Higher gas prices did not, however, dampen consumer confidence, which jumped during the month, and they certainly did not stall new vehicle sales. Nor was the level of used vehicle transactions, where one would more likely see the first impact, affected.

“There was, however, some acceleration in the ongoing shifts between market classes and engine selections within a model,” Webb added.

Webb noted the average sales-weighted fuel economy of new vehicles purchased in February increased to 23.7 mpg, up from 22.7 mpg a year ago and only 20.4 mpg in February 2008.

“Pricing strength in the wholesale market also reflected the continued shift in consumer preferences,” Webb said. “Compact and midsize cars remained far and away the strongest segments of market, both over the past three months and over the past year.”