Wholesale used-vehicle prices declined 0.7% in October and non-seasonally adjusted prices declined 2% during the same time, reflecting a downward trend for all vehicle segments in recent months, according to Manheim's Used Vehicle Value Index.
On a year-over-year basis, wholesale pricing for cars remains down, while pricing for vehicles in the truck category remains up. Price performance between cars and trucks has narrowed considerably, according to the report.
The company explained that although the Manheim Index is mix-adjusted, it does not account for overall inflation in new-vehicle pricing or the shift to higher trim levels. Given that information, the company added, it is not inconsistent for the index to be up even as commercial consignors report “less-than-satisfying” end-of-term lease residuals or lower repossession recovery rates.
“It is better to look at the index relative to its trend or in relation to a host of current and past new-vehicle price measures. On that scale, wholesale pricing has shown some easing of late, but it is not particularly weak,” according to the Manheim Index report.
Results have been in line with its expectations from the beginning of the year, according to the company.
On the new-vehicle front, new-car and light-duty truck sales in October were about 6% lower than the same time last year. However, the new-vehicle seasonally adjusted annual selling rate (SAAR) was at the highest point it’s been all year — 18 million.
Manheim credits this all-time high SAAR to an artificial boost from a two-day selling day adjustment and bigger incentives moving more volume. Even though the company described the month as “good” in terms of new-car sales, it added that it was not good enough to prevent growing inventory overhang. Production cuts should be expected in the coming months, it added.
“Otherwise, there will be a need for even greater incentives and an inevitable downward pressure on used-vehicle residuals,” the company stated in its report.