Wholesale vehicle prices up after 3 months of sequential drops
After three months of sequential declines, wholesale vehicle prices edged higher in May and remain well above year-ago levels.
The Manheim Used Vehicle Value Index was at 222.7 in May, a 0.7% increase from April and a 9.7% year-over-year increase, when adjusting for mix, mileage and seasonality.
Unadjusted, the index was up 1.1% month-over-month and 12.1% year-over-year, according to parent company Cox Automotive.
“In May, Manheim Market Report (MMR) values saw a shift in price trends, with prices increasing in the first three weeks but declining over the last two,” the company said in a report accompanying the index.
“Over the previous five weeks, the Three-Year-Old Index increased a net 0.4%. Over the month of May, daily MMR Retention, which is the average difference in price relative to current MMR, averaged 98.7%, meaning market prices were slightly behind MMR values,” Cox said.
Breaking it down by segment, pickups were the only one of the six market classes to see a year-over-year decline in May (down 2.7%), on an adjusted basis. The most significant growth was for vans, whose prices were up 27.6%.
On a month-over-month basis, the full-size and luxury car segments were the only ones to see values decrease, Cox said.
Moving to the retail side of the market, data from car-shopping app CoPilot indicates that used-vehicle prices continue to hover near record highs.
According to the company’s Used Car Price Premium Index, average used-car prices were at $31,450 in May. That is 42.5% or $9,375 higher than where used prices would normally be projected to land in May, CoPilot said.
That dollar gap is an all-time high, the company said.
However, CoPilot is projecting some price relief among later-model vehicles.
“The average time that 1–3-year-old vehicles have spent on dealer lots has jumped by 47% over the past year. This glut of aging inventory is building pressure on dealers to start dropping prices more aggressively,” CoPilot said in the report.
“When combined with increasing payment levels due to higher interest rates, price declines among more recent used car models are likely to accelerate significantly in the coming months.”
Breaking that down further, 1-3-year-old vehicles were priced at a record $11,765 premium in May, and 4- to 7-year-old vehicles had a premium of $9,564, also a record.
CoPilot expects these two groups to show some price relief.
Not the case for older cars.
“Inflated prices of more recent used car models continue to push more consumersinto the market for older vehicles, resulting in record high prices for 2005-2014 cars. Given the heightened demand for these vehicles, prices are not expected to return to normal levels as quickly as newer models,” CoPilot said.