Kontos: Sept. Data Confirms Typical Seasonal Price Movement

ADESA Analytical Services confirmed what dealers probably are seeing in the auction lanes — predominantly seasonal price softening in September and a gradual descent from all-time highs seen in April.

According to ADESA’s monthly analysis of wholesale used-vehicle prices, September’s mark averaged $9,830 — down 1.7 percent from August and up 1 percent versus prior year.  

ADESA’s Tom Kontos reiterated a position he’s attempted to hammer home during his previously monthly commentaries about the wholesale market.

“As we’ve pointed out several times in the past, used-vehicle values have approached a ceiling vis-à-vis new-vehicle prices,” Kontos started out.

“Strong new-vehicle sales in September support the thesis that some car shoppers are gravitating towards new vehicles when faced with a choice of paying relatively high prices for used cars versus affordable new vehicles, as long as financing and available inventory are not prohibitive factors,” he continued.

So how long does Kontos expect these conditions to last?

“This tendency will continue to provide downward pressure on wholesale prices even as tight used-vehicle supplies maintain price pressure upwards,” he explained.

“Expect prices to continue their typical seasonal decline in October and November with a modest uptick in December as some remarketers hold cars until the new year,” Kontos added.

Turning back to September data, ADESA determined manufacturers registered a 0.7 percent month-over-month price increase and a 2.7-percent year-over-year rise. Kontos said this increase indicates still-strong demand for off-rental program units.

Elsewhere, ADESA found fleet/lease consignors experienced a 2.1-percent sequential price decrease and a 1.9-percent annual increase during September. Kontos believes that’s in part from strong dealer demand for rental risk and commercial fleet units.

Also, Kontos noted dealer consignors saw a 3.3-percent average price decrease versus August and a 7.3-percent uptick versus September 2009.

In a look at the September data by vehicle segment, ADESA noticed trucks fared better than cars. Truck prices slid down just 1.1 percent in September compared to the prior month, while cars dipped 2.8 percent. Compared to year-ago prices, cars prices were off by 1.9 percent in September. Truck prices, however, climbed by 4.3 percent.

A deeper look into ADESA’s car segment data revealed full-size and compact units are not performing as well as others in the category.

ADESA said September prices of full-size units were down 5.5 percent from the previous month and 23.1 percent against the year-ago mark. Compact car prices slipped 4.6 percent from August and 4.9 percent from September 2009.

Conversely, full-size vans continued their price gains in September. Against the August figure, prices for these vans moved up 2.6 percent. And compared to a year ago, they’re 14.4 percent higher.

Minivans prices also are performing pretty well, too. Although ADESA noticed minivan prices slipped just 0.4 percent in September on a month-over-month comparison, they’re 7.8 percent higher than a year ago.

ADESA estimated that auction industry inventory levels stood at 31 days at the end of September. Kontos compared that reading to last September, which stood at 33 days.

“(This) indicates inventory levels have risen near their norms for the fall defleeting season,” he pointed out.

Finishing up his monthly commentary, Kontos touched on several broad economic figures connected to the used-vehicle industry.

Kontos mentioned CNW Research data that indicated retail used-vehicle sales in September climbed 2.6 percent year-over-year for franchised dealers, 1.2 percent for independent dealers, and 1.9 percent in total.

Looking at it on a month-over-month basis, however, Kontos said CNW’s information revealed September retail sales of used vehicles dropped by 21 percent for both franchised and independent dealers.

Kontos also brought up Autodata’s analysis of certified pre-owned sales in September. Those figures indicated CPO sales slipped 4.8 percent versus August but were 21.5 percent higher compared to September 2009.

Finally, Kontos noted the consumer price index for used vehicles rose by 15.5 percent year-over-year in August. He said the reading was the latest available based on data from the Bureau of Labor Statistics.