McLEAN, Va. -

NADA Used Car Guide discovered that AuctionNet wholesale prices followed a familiar upward course in January.

Although senior analyst Jonathan Banks indicated the 1-percent mileage-and-mix adjusted rate of appreciation was a bit less than what he’s seen in recent years following the transition from December.

“This being said, the slowing rate of appreciation was expected given the growth we’ve seen over the past three years,” Banks explained in the February’s edition of NADA UCG’s Guidelines.

“In fact, we’re forecasting that used price growth in 2012 will be a relatively mild 1.8 percent or 1.2 points back from the 3 percent witnessed last year (on a seasonally adjusted basis),” he continued.

“In addition, we expect that gradually improving economic conditions over the course of the year will mean that prices will appreciate more in the fourth quarter than they will in the preceding three,” Banks added.

Across vehicle classes, NADA UCG found month-over-month pickup truck appreciation led all others at 2.2 percent. Price growth for vans, utilities and cars — in that order — ranged from 1.6 percent to a little more than 1 percent.

On an annual basis, the report showed prices for cars and vans were up by 5.8 percent and 4.7 percent, respectively, while pickup and utility prices moved 2.5 percent and 2.9 percent higher than they were in January a year ago.

At a segment and model year level, NADA UCG noticed price growth continues to be concentrated on 2009–2011 model year vehicles, reflecting what analysts contend is both the scarcity of volume and demand for late-model, certifiable units.

Elsewhere, Banks mentioned large pickup and SUV prices advanced virtually across the model year board to average 1 percent or exactly double the average amount of growth achieved by midsize and compact cars (0.5 percent).

Moving along, NADA UCG noted compact utilities, midsize vans and luxury car prices all softened in January, although Banks said only the near luxury segment (vehicle such as the BMW 3 Series) saw prices fall more than 1 percent.

Relative to last year, overall AuctionNet supply in January for vehicles up to five years in age was down by 15 percent with every major segment continuing to experience annual reductions in volume.

Combined, the report indicated large pickup and SUV volume sunk 28 percent, compact and midsize car volume dropped 12 percent and luxury car volume was off by 20 percent. Banks pointed out midsize van volume also dipped by almost 18 percent.

“Value adjustments for February’s edition of the Official Used Car Guide are reflective of the seasonal firming associated with the first third of a given year,” Banks explained.

“As a result, average values for 60 percent of all NADA segments were either equal to or greater than January’s figures with upward changes predominantly applied to fuel efficient car segments, large SUVs and midsize utilities,” he continued.

“Downward adjustments for the remaining NADA segments averaged less than 1.4 percent and mostly impacted luxury vehicles and vans,” Banks went on to say.

New-Vehicle Analysis

NADA UCG described the new-vehicle sales start for the new year as “phenomenal” since franchised dealers compiled a  14.1 million seasonally adjusted annual rate (SAAR) — the highest seen in a non-clunkers month since May 2008.

All told, Banks calculated more than 911,000 units were sold equating to an 11.5-percent improvement over the prior year.

Continuing to benefit from a lineup of freshly redesigned models, Banks pointed out Chrysler brand led the way with sales gains of 81 percent.

Following closely behind was Mazda with the brand recording a 68-percent sales increase on the strength of subcompact Mazda2 and compact Mazda3 sales. Banks determined combined sales of the two new models soared 123 percent higher.

NADA UCG also mentioned Mazda saw Mazda6 sales rise by 118 percent, but Banks acknowledged a 41-percent year-over-year increase in average incentive spending to $2,744 means “that the jump in sales was due in part to the deal and not natural demand.

“In addition, the 6’s rental penetration rate over the past few months has been significantly above the industry mean so it’s highly likely that sales to rental fleets also played a large role in the model’s performance for the month,” Banks added.

NADA UCG highlighted that rounding out the top five non-luxury brand performers for January were Volkswagen (up 48 percent), smart (up 39 percent) and Jeep (up 37 percent).

At 9 percent, Banks mentioned Honda enjoyed its first annual bump in sales since April of last year on solid gains by the redesigned Civic (50 percent) and its utility cousin the CR-V (16 percent).

He went on to mention Toyota notched its third straight month of growth by also recording a 9-percent improvement in sales. Banks referenced the Camry (up 56 percent) and the Yaris (64 percent) — both reworked for the 2012 model year — spearheaded the brand’s success for the month.

“January’s advancements make it clear that Japanese OEMs, hard pressed for most of last year, are now fully back to fighting shape and their customer base is reengaged, none of which is news welcomed by the competition,” Banks surmised

“Considering this, perhaps it’s no coincidence that both Ford and GM had their worst sales performances since the spring of last year,” he continued.

Although sales at the Blue Oval were up by 8 percent, NADA UCG noted January was the first month since May of last year that new deliveries didn’t improve by double-digits.

Meanwhile, the report conceded that General Motors is finding it more difficult to catch traction in the new year as every one of the manufacturer’s brands posted negative results last month.

Starting from the bottom, Banks noted sales at Cadillac fell by 29 percent with Buick sliding 23 percent, GMC dipping 10 percent and Chevrolet ticking 1 percent lower.

In terms of luxury brands, NADA UCG recapped that Land Rover (41 percent), Mercedes-Benz (24 percent) and Audi (20 percent) all posted double-digit sales gains last month.

Banks pointed out BMW, last year’s luxury sales leader, saw deliveries increase 3 percent while sales for former champ Lexus fell by 5 percent making January the 14th red month out of the last 18 for the brand.

Referencing information from Autodata, NADA UCG indicated average incentive spending fell from December to January by 9 percent to reach $2,435 per unit. Banks added spending was also down 5.6 percent on an annual basis.

“It’s worth noting that over the last five years, incentives have fallen by roughly 7 percent over this period of time, but this year spending fell by an additional two points,” Banks noted.

“Moreover, the majority of mainstream brands — including Chrysler, Hyundai, Toyota and Chevrolet — all reduced incentive spending significantly relative to last year,” he continued. “In fact, not one GM brand increased spending on an annual basis (a fact that may have contributed to sales performances for the month) and total spending for Toyota is now higher than only five other brands.”

In wrapping up the new-vehicle discussion, NADA UCG discovered new-model inventory took a typical seasonal turn north and overall days’ supply grew by 16 days to land at 67.

“Although supply jumped, looking back a year inventory stood at 71 days or 5.6 percent higher than what was observed last month,” Banks explained. “In addition, average January new vehicle days’ supply over the past nine years has been 86 days, much higher than current levels.”

Banks also mentioned domestic brands experienced the biggest increase in supply at 22 days, primarily due to a 29-day rise in light truck inventory.

“Given this, domestic light trucks, in particular large pickups, are prime candidates for large incentive increases over the next month or two,” Banks projected. “Asia/Pacific and European brand supply moved up much less at 13 and 5 days, respectively.”

Review of U.S. Economic Indicators

Economically, NADA UCG thinks the year started out moving solidly in the right direction with improvements in employment, productivity, and even some relatively upbeat news in the housing market complementing the nearly four year high in new-vehicle sales.

On the employment front, the report indicated that the Bureau of Labor Statistics revealed 243,000 jobs were added to nonfarm payrolls in January and as a result, the unemployment rate moved down 0.2 points to reach 8.3 percent. Officials indicated that reading was the lowest level of unemployment seen since February 2009.

“More good news can be gleaned by looking through the BLS’ jobs report,” Banks emphasized. “The drop in the unemployment rate was mostly due to new jobs being added as opposed to a significant drop in the participation rate, and for only the second time since 1998, 50,000 jobs were added in manufacturing (primarily in durable goods, which includes motor vehicle and part production).

“In the last two months, manufacturing has added 82,000 jobs to non-farm payrolls,” he added.

The BLS also revised payroll estimates for November and December by 57,000 and 3,000 respectively.

Per the Conference Board, NADA UCG acknowledged consumer confidence slipped last month despite the employment improvements. After jumping by nearly 10 points in December, the firm’s Consumer Confidence Index fell by 3.7 points to reach 61.1 last month.

“Slide aside, January’s reading marks the eighth month out of the last fourteen that the CCI has been at or above 60,” Banks stressed.

Reflecting a continuation of the growth seen in the fourth quarter, Banks also mentioned industrial production improved for the third month in a row in January.

The Institute of Supply Management’s Purchasing Managers’ Index moved up a full point to 54.1, while the Inventories and New Orders indices lunged upward by 4 and 2.8 points respectively.

Per the ISM, a PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

NADA UCG also noted the Case/Shiller Composite-20 Home Price Index moved down yet again in November when the latest reading was available. Analysts noted the dip this time by nearly a point to 137.5

“This is over five points back of where prices stood on a year-ago basis and brings the index back to a level last seen in early 2003, or some nine years ago,” Banks explained.

“Falling prices aside, the months’ supply of homes fell by nearly two months on an annual basis to hit 6.2 in December, while the number of existing home sales increased for the third month in a row,” he continued.

“A full housing recovery is still some ways off, but in certain respects things have — at a minimum — started trending towards less negative,” Banks emphasized.

“Recent economic trends inspire something just a tick beyond guarded optimism, but the same could have been said of last year at this time before earthquakes, tsunamis, and debt downgrades derailed fledgling economic momentum,” he went on to say.

Banks also shared more of NADA UCG’s industry findings in a video posted here.