The Manheim Used Vehicle Value Index hit a record high for the second consecutive month, as wholesale used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) rose 1.1% month over month in June. The increase brought the Index reading to 129.3, a 2.5% increase from a year ago.

“The volume of transactions is up more dramatically than supply thanks to real demand from dealers and, in turn, consumers,” said Jonathan Smoke, chief economist for Cox Automotive. “Broadly speaking, the second quarter was supported by continued low unemployment and strong consumer confidence remaining near a 16-year high.”

Indicative of a stable U.S. economy, first quarter GDP growth was revised from the previous estimate of 1.2% to 1.4%. Experts predict the second quarter will likely come in stronger at a level of growth consistent with what the economy has experienced throughout this current expansion.

Despite the strength in wholesale used-vehicle prices, new-vehicle sales year to date are down 2% compared to last year. Franchised dealers have had more than four million new units in stock for the previous five months, and new-vehicle sales in June slipped 3% from last year. Except for light truck sales, which were up 4% year over year, much of the decline can be attributed to a downturn in car sales, which were down 13% year over year.

For used-vehicle pricing trends, all major car segments — excluding compact and midsize car classes — were up from a year ago, with especially strong increases in pickups and vans. Second quarter wholesale pricing for all vehicle segments included:   

• Compact cars, typically one of the weakest segments, experienced some relative strength in comparison to the midsize car class with prices down a modest 0.4%.

• Midsize cars were the weakest segment compared to last year with a 2.1% decline.

• Pick-ups and vans experienced the most significant increase of all car classes, with pick-ups climbing 7.5% vs. last year and vans following closely behind at 7.4%.

• SUVs and CUVs increased 2% from last June, slightly weaker than the overall market.

• Luxury Car values increased 1.4% over the same period last year and remain relatively weak compared to the overall market. The small gain can partially be attributed to ongoing efforts for more efficient remarketing of cars in this class.

For rental risk pricing, the average price for these units sold at auction in June was down 4% from last year, but was up 0.2% compared to May. SUVs and CUVs accounted for 32% of June rental risk sales vs. 30% last June, and the share of compact cars fell from 25% to 23%. The average miles for rental risk units was 2% below June 2016, rounding out at 40,600 miles last month — significantly less than the record-breaking 50,000-plus miles recorded in June 2015.

“The May and June Index results challenge concerns that increasing wholesale supplies from near-peak off-lease volumes and rising rental volumes would lead to rapidly declining used-car values,” said Smoke. “On the contrary, strong retail demand for recent model-year used vehicles is encouraging dealers to buy more vehicles at auction and the increased demand is more than offsetting the higher supply.”