The Car and Truck Fleet and Leasing Management Magazine

Current Used-Car Prices Remain Low, Economic Conditions Look Bright

December 17, 2003

According to ADESA Corp., the wholesale used-vehicle market suffered a temporary setback in its firming trend last month. Although prices were down on average, this downturn was isolated in two- and three-year-old, mid-sized cars that were in relative abundance due to later-than-usual fall “defleeting.” Also, fleet/lease volumes were 45 percent of total auction volume compared to 38 percent the year before.

According to ADESA Analytical Services' monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, average auction prices in November were down 2.1 percent from the previous month, and 6 percent from year-ago levels.

Still, used-vehicle prices as a percent of new vehicle prices remain at historical lows, causing shoppers to purchase more used vehicles, as evidenced by year-over-year growth in retail used-vehicle sales since June. Retail used-vehicle sales in November were up 10 percent compared to last year according to data from CNW Marketing/Research. The retail sales for independent used-car dealers were up 21.3 percent.

Auction inventories, according to the ADESA Auction Inventory Index, have begun climbing again but remain down relative to year-ago levels, as they have since mid-May. This leaves the market well positioned at year-end to continue the price-firming pattern into 2004.

The ADESA Auction Dealer Optimism Index was up for the seventh consecutive month in November, but at a lower rate than last month. This means that dealers purchased a higher percentage of vehicles offered for sale by other dealers at ADESA auctions than they did last year – another indication of stronger market conditions.

General economic conditions and the outlook for the economy also look very bright. The latest economic data on GDP growth, stock prices, corporate profits, productivity, labor markets, and manufacturing look positive on Wall Street and Main Street. Business spending is finally beginning to combine with consumer spending to sustain and strengthen the budding economic expansion.

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