Wholesale prices declined in May, while auction volume continues to grow. 
 - Photo by Eric Gandarilla. 

Wholesale prices declined in May, while auction volume continues to grow. 

Photo by Eric Gandarilla. 

Wholesale prices for used vehicles up to 8 years old fell 1.7% month-over-month in May, a level that’s typical for this time of year, according to J.D. Power’s June Used Car and Light Truck Guidelines.

Unlike other months where luxury vehicle values depreciate at a considerably higher rate than their mainstream counterparts, losses for both mainstream and luxury vehicles were relatively consistent.

The heaviest depreciation on the mainstream side came from large utilities, which saw a 3% decline in wholesale price. Similarly — in the luxury segment — luxury large utility prices fell by 4.9%.

In terms of auction volume, volume increased 12% month-over-month and 2.6% year-over-year.

“Year-over-year volume continues to grow with each passing month, and as a result there should be a transition soon where there is a more overall auction volume compared to 2017,” the report noted.

The largest volume gains are coming from the SUV segments, the report stated. Compact premium SUV volume is up 74.8% and large SUV volume is up 35.8%. The gains from these segments have still not swayed the pendulum of overall market share in favor of trucks, however. As of last month, cars make up 51% of auction volume while trucks make up the remaining 49%.

Wholesale prices are expected to decline 0.2% in June, according to J.D. Power. Meanwhile, used vehicle prices are expected to increase by 0.8% by the end of the year. Factors that could negatively affect used vehicle prices will be incentives, an anticipated increase in used supply, worsening credit conditions, and rising gas prices.

Factors working in favor of higher used vehicle prices are favorable labor conditions and strengthening housing prices.


Related: Late-Model Auction Volume Slips 1.6% in April

Originally posted on Vehicle Remarketing

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