Auction Prices Up in March
Average auction prices in March were up significantly from both prior month and year-ago levels – the first time this has happened since November 2002. Moreover, prices for vehicles seven-model-years-old or less increased by 6.6 percent over prior year ($10,949 versus $10,272 – a difference of $677).
According to our monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class
*, average auction prices in March were up 4 percent from the previous month, and 2.1 percent from year-ago levels. Car prices remained down from year-ago levels, but were up on a month-over-month basis. Truck prices were strong in virtually all model classes, although minivans and small pickups remained down compared to last year.
Retail used-vehicle prices as a percent of new vehicle prices remain at historical lows. This is continuing to cause shoppers to purchase more used vehicles, as evidenced by year-over-year growth in retail used vehicle sales since last June. Retail used vehicle sales in March were up 1.5 percent compared to last year according to data from CNW Marketing/Research. The retail sales rebound is especially pronounced for independent used-car dealers, whose sales were up 11.3 percent.
Auction inventories are at very low levels, according to the ADESA Auction Inventory Index
, which stands at 85.2 and is well below its year-ago level of 144.2. The low inventory levels are the result of decreased supply and strong demand. These conditions are contributing to the wholesale price firming described above.
The ADESA Auction Dealer Optimism Index
was up for the eleventh consecutive month in March and by a higher rate (8.2 percent). This means that dealers purchased a higher percentage of vehicles offered for sale by other dealers at ADESA auctions than they did last year. This also is a reflection of supply-demand conditions, which are causing dealers to bid aggressively for vehicles at auction.
*The analysis is based on the AuctionNet database of nearly six million annual sales transactions from approximately 150 of the largest U.S. wholesale auto auctions, including those of ADESA (40 U.S. auctions) as well as other auction companies. ADESA Analytical Services has segregated the AuctionNet database using the J.D. Power and Associates Vehicle Segmentation Guide to study trends by model class.