Kontos: April Wholesale Prices Stay Near Record Level

Concurring with other wholesale market assessments, ADESA Analytical Services discovered April’s wholesale used-vehicle prices averaged $10,551 — a reading flat with March and only 0.6 percent lower than last April’s record level.

As dealers have readily seen, ADESA also noticed prices were strongest for compact cars (up 7.2 percent month-over-month and 14.4 percent year-over-year) and weakest for full-size SUVs (down 2.9 percent month-over-month and 7.5 percent year-over-year). ADESA mentioned that full-size pickup prices slipped, too, off by 3.1 percent month-over-month and 12.2 percent year-over-year.

“Average wholesale prices remained at near-record levels in April as concerns about new-vehicle supply disruptions and high gasoline prices continued to add to the existing tight-supply/high-demand dynamic in place in the used-vehicle market since mid-2009,” ADESA’s Tom Kontos explained.

“Moreover, new-vehicle incentives were down considerably in April, giving used-vehicle prices even more upside support,” Kontos continued.

ADESA also found manufacturers registered a 1.6-percent month-over-month wholesale price decrease and a 14.9-percent year-over-year rise. The company said fleet/lease consignors experienced a 0.4-percent sequential price increase and a 1.8-percent annual increase.

Lining up with what KAR Auction Services chief executive officer Jim Hallett mentioned last week, ADESA indicated dealer consignors saw a 5.7-percent average price increase versus March and a 6.7-percent uptick versus April of last year.

ADESA estimated auction industry inventory levels stood at 25 days at month-end compared to 31 days last April as used-vehicle supply remains tight.

“Dealers may have spent more for the vehicles they bought in the lanes and online at wholesale auto auctions, but strong retail sales and encouraging gross margins reported by the publicly traded auto retail groups indicate that consumers are willing to pay more for desirable used vehicles as well,” Kontos surmised.

“April also marked the return of a pattern seen often during the last run-up of gasoline prices to the $4 level, namely recording  the strongest price gains for compact cars and the most significant price declines for full-size SUVs and pickups,” he added.

In continuing his monthly commentary, Kontos said April retail used vehicle sales shot up 10.7 percent year-over-year for franchised dealers and 17.3 percent for independent dealers, according to CNW Research. He also mentioned on a month-over-month basis, used-vehicle sales were up by about 40 percent for both groups.

As reported previously by Auto Remarketing, Kontos noted Autodata Corp. figures that indicated April’s certified pre-owned sales slid 4.0 percent versus March but moved 8.0 percent higher compared to April of last year.

Finally, Kontos cited Edmunds.com when stating average new-vehicle incentives have dropped by about $500 this year.

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