Kontos: Fall Rental Sales Push October Wholesale Prices Higher

ADESA thinks one wholesale factor pushed prices higher both month-over-month and year-over-year in October — a greater amount of rental vehicles coming down the lanes.

Before economist Tom Kontos explained why, ADESA Analytical Services’ monthly analysis turned up the specific price movements.

ADESA found October wholesale used-vehicle prices averaged $9,842 — up 0.9 percent compared to September and 0.8 percent versus October of last year.

The auction company indicated car prices continued to correct downward and truck prices upward as they reset from high gas prices earlier this year.

“Wholesale prices appeared to do an about-face as they ceased their sequential and year-over-year decline seen since peaking in April,” Kontos noted.

“However, a deeper dive quickly reveals that prices continued to soften in all three of the traditional auction industry seller segments: factory, fleet/lease and dealer consignment.

“With fall de-fleeting in full swing, off-rental units sold by manufacturers and rental companies in the factory and fleet/lease lanes and online made up a higher percentage of total auction volumes in October,” he continued. “These vehicles tend to be late-model, higher-dollar units, and therefore, contributed positively to average prices for the month. 

“Had the same proportion of vehicles been sold by each of the seller groups in September and October, average prices would have fallen by 2 percent on both a sequential and annual basis,” Kontos went on to say.

Based on this analysis, ADESA projected wholesale prices should continue the modest softening pattern described in previous updates.

Looking deeper into the October data, ADESA found manufacturers registered a 3.1-percent month-over-month price decrease and a 5.1-percent year-over-year rise. Kontos mentioned fleet/lease consignors experienced a 3.1-percent sequential price decrease and a 0.4-percent annual decrease.

Furthermore, ADESA watched dealer consignors experience a 1.0-percent average price decrease versus September and a 3.2-percent uptick versus last October.

ADESA estimated auction industry inventory levels stood at 30 days at month-end marking the second month in a row that days-supply of auction inventories matched year-ago levels.

“Auction industry inventories had been below year-ago levels from July 2009 through August by our estimates,” Kontos said.

“The rise in inventory levels is primarily a reflection of higher fall de-fleeting,” he added.

Kontos wrapped up his monthly commentary by recapping October sales figures.

Kontos cited CNW Research information that showed retail used-vehicle sales in October were up 13.0 percent year-over-year for franchised dealers and 11.7 percent for independent dealers. But a month-over-month basis, CNW’s data revealed used-vehicle sales were down about 16 percent for both groups.

The ADESA economist also mentioned Autodata information that determined October certified pre-owned sales in October slid 1.4 percent versus September and versus the prior year.