Current Used-Car Market Conditions and Outlook
Average auction prices in May were up from year-ago levels for the third consecutive month and were also higher than in April. Prices for vehicles seven model years old or less increased by 5.7 percent over prior year ($11,043 versus $10,453 – a difference of almost $600).
According to our monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class
, average auction prices in May were up 3.7 percent from year-ago levels, and up 1.8 percent relative to the previous month. Car prices were up both sequentially and annually, with full-size, compact, and sporty cars making the strongest year-over-year price gains. Truck prices also showed strength despite high gas prices.
Retail used-vehicle prices as a percent of new-vehicle prices remain at historical lows and this has helped support a traditionally strong spring market. Retail used-vehicle sales in May were up 10 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 16.1 percent.
Auction inventories remain lower than year-ago levels, but have risen modestly in recent weeks. The ADESA Auction Inventory Index
stands at 104.2 – 16-percent below its year-ago level, but 7-percent above April month-end. The modest rebound stems from returning program vehicles; off-lease volumes continue to decline.
The ADESA Auction Dealer Optimism Index
was up for the 13th consecutive 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. This also is a reflection of supply-demand conditions, which are causing dealers to bid aggressively for vehicles at auction yielding more acceptable prices for sellers.