Manheim Releases Used-Vehicle Value Index
Wholesale used car prices stabilized in August after falling steadily for five months, according to Manheim Auctions, which on Sept. 6, 2001 released the first-ever Manheim Used Vehicle Value Index, a monthly measure of wholesale used-vehicle pricing trends.
“The Manheim Index for August was up slightly from July’s measurement, increasing from 113.8 to 114.0, which marked the first time since February that we have seen a break in the downward trend in used-vehicle prices,” said Tom Webb, Manheim’s chief economist and author of the Manheim Index. “Stronger sales at the retail level in August depleted dealer inventories, which made dealers more active bid-ders at auction and caused prices to increase slightly.”
The Manheim Index’s two-tenths of a point increase in August halted a downward trend that began in February, one that has seen the index drop from 117.4, a total of 3.6 points. This downward trend came on the heels of five straight years of steadily increasing used-car prices at the wholesale level which saw the index rise from a base of 100 in 1995.
“It is not a surprise to learn that used-vehicle prices overall are trending down this year,” said Webb. “As the index makes clear, this is part of the cyclical nature of the automotive business that is constantly shifting to correct for imbalances between supply and demand.”
Webb said the Manheim Index was created to provide an accurate, timely and reliable indicator of price trends in the used-vehicle market. The index is based on more than 4 million used-vehicle transactions that occur annually at the company's 85 North American auctions.
“The Consumer Price Index has been the primary barometer of the used-car market for many years, but its accuracy and usefulness are limited by several factors,” he said. “One of the reasons we believe the Manheim Index is more accurate is because we have made adjustments to account for differences in mileage, seasonality, market segment, and model mix. That allows us to arrive at a single measure of used-vehicle price changes independent of underlying shifts in the characteristics of the vehicles being sold.”
While the wholesale auto remarketing business remains a largely “invisible” industry, it is a major contributor to the used-car marketplace, which is valued at $363 billion annually and thus has significant implications for the automotive industry as a whole and for the broader U.S. economy.
Manheim plans to post the Index on the Manheim Auctions Web site (www.manheimauctions.com) on the fifth business day of every month, along with commentary and analysis from Webb.