Kontos Pinpoints June’s Average Wholesale Price Dip

ADESA’s Tom Kontos discovered specifics as to just how far average wholesale prices fell in June.

As prices slid for the second month in a row, Kontos put them at approximately $340 less than their peak in April and about $375 less than their all-time peak in April of last year.

“Some of this moderation in prices is seasonal, and tight supplies plus steady demand should keep used-vehicle prices from dropping dramatically,” Kontos stated in his monthly commentary released on Wednesday.

“Moreover, late-model used vehicle prices remain strong, as dealers struggle to find off-rental, off-lease, off-fleet and other used vehicles that would have been sold new in the lean years of the 2008-2009 recession,” he continued.

“This is particularly true for franchised dealers who would normally find a steady supply of late-model used vehicles in ‘closed’ auctions held by their manufacturers,” Kontos went on to say.

“As these dealers search for units in ‘open’ sales, this puts upward pressure on prices and limits the availability of units for independent and buy-here, pay-here dealers seeking older vehicles,” he added.

According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, June wholesale prices averaged $10,235 — down 2.2 percent compared to May and 0.5 percent lower than the same month a year ago.

On a year-over-year basis, ADESA said prices were strongest for compact cars and midsize cars, which jumped 12.8 percent and 13.2 percent, respectively. The weakest prices were for full-size pickups and SUVs, which sunk 11.0 percent and 19.3 percent, respectively.

Kontos explained both trends indicated continued sensitivity to high gas prices among dealers bidding on these vehicles in-lane and online. He noticed luxury cars and SUVs also took significant hits in value, too.

Kontos also mentioned manufacturers registered a 4.9-percent month-over-month price increase and a 9.2 percent year-over-year rise.

“These tend to be the youngest units sold at auction and are in shortest supply,” he pointed out.

Furthermore, ADESA’s economist noted fleet/lease consignors experienced a 3.4-percent sequential price decrease and a 0.5-percent annual increase.

As far as dealer consignor movement in June, Kontos said dealers saw a 0.2-percent average price decrease versus May and a 10.6-percent uptick versus June of last year, “indicating that dealers are still finding a ready wholesale audience for their aged units and unwanted trades — though the clock is ticking.”

ADESA estimated that auction industry inventory levels stood at 24 days at month-end compared to 30 days last June as used-vehicle supply remains tight.

Kontos wrapped up his monthly analysis by recapping data from CNW Research that revealed retail used-vehicle sales in June were up 5.0 percent year-over-year for franchised dealers but down 5.8 percent for independent dealers.

However, as previously reported by Auto Remarketing here, Kontos pointed out that on a month-over-month basis used-vehicle sales were up for both groups — 10.0 percent for franchised dealers and 7.5 percent for independents.

“Through mid-year, franchised and independent dealers have sold almost 672,000 (5.2 percent) more used vehicles than last year,” Kontos concluded.

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