ST. PAUL, MN
– The Automotive Fleet & Leasing Association (AFLA) held its first-ever teleconference on the outlook for used-vehicle values on June 28. The teleconference featured a presentation by Tom Webb, chief economist for Manheim.
According to Webb, wholesale used vehicle prices (on a mix, mileage, and
seasonally-adjusted basis) rose 0.4 percent in May.
The continued strength of used vehicle pricing in the wholesale market has been driven by fundamental market forces (labor market and credit conditions) and by lower inventories and more conservative pricing in the new vehicle market.
Web said new-vehicle market forces are applying less pressure to wholesale used-vehicle prices. New-vehicle incentive spending remained constrained in the month of May and a greater share of sales was accounted for by redesigned or new models, meaning less direct competition with newer-model used vehicles. The biggest support to used vehicle values, however, continues to come from the reduced level of new vehicle inventories. At the beginning of June, the inventory unit count was 10 percent below a year ago and the days supply was the lowest since the initial employee pricing programs in the summer of 2005.
In recent months, seasonally-adjusted prices for pickups and SUVs have risen even as
relative auction volumes have increased. Part of this is due to a richer mix of vehicles
within each of these categories, especially the full-size pickups. Auction values for
full-size vans have also risen recently, but that has been accompanied by lower relative
volumes – a situation that will likely reverse as the number of end-of-service commercial
fleet vehicles continues to grow. Wholesale values for compact cars have increased as consumers gravitate toward these vehicles due to higher fuel prices.
This is the first in a series of used-vehicle value teleconferences that AFLA will hold for its members. The next teleconference for AFLA members will occur in September and feature Tom Kontos, vice president, industry relations & analytical services for ADESA.
For information on how to join AFLA, visit www.aflaonline.org.