Manheim Reports Slight Decline in Q4 Wholesale Used Vehicle Prices

Despite Dip, Prices Remained At His­tor­i­cal­ly High Lev­els As Con­sumer Demand for Used Vehi­cles Remained Strong

ATLANTA – Jan­u­ary 7, 2014 – Man­heim today report­ed that used vehi­cle prices in the U.S. declined slight­ly in the last quar­ter of 2013 but remained at his­tor­i­cal­ly high lev­els as con­sumer demand stayed strong. Whole­sale used vehi­cle pric­ing fin­ished 2013 down 1.9 per­cent from the year-end lev­els of 2012. The find­ings were part of Manheim’s quar­ter­ly Used Vehi­cle Val­ue Index con­fer­ence call held ear­li­er today.

Despite the decline for the year, used vehi­cle val­ues in 2013 were well above the lev­els of five years ago when prices start­ed to rise. Used vehi­cle sup­plies began to increase last year, along with increased new car sales, but strong demand in the retail mar­ket kept prices from falling dra­mat­i­cal­ly. Attrac­tive financ­ing and increased employ­ment allowed more con­sumers to pur­chase used vehi­cles. A dis­ci­plined approach by automak­ers and deal­ers to the new car mar­ket also helped used car val­ues.

“Whole­sale used vehi­cle prices con­tin­ue to hold up bet­ter than many expect­ed,” Man­heim Chief Econ­o­mist Tom Webb said. “Automak­ers and deal­ers showed restraint in their use of incen­tives on new vehi­cles, which helped main­tain the val­ue of used vehi­cles even as inven­to­ries increased. We also saw an increased empha­sis on cer­ti­fied pre-owned vehi­cles, pro­vid­ing anoth­er boost to used vehi­cle val­ues.”

Year-end pric­ing for whole­sale vehi­cle seg­ments includ­ed:

  • Com­pact & Mid­size Cars both expe­ri­enced pric­ing declines in the whole­sale vehi­cle seg­ment. Com­pact car pric­ing was down 1.3 per­cent and mid­size car prices declined 3.3 per­cent in Decem­ber year over year. Height­ened com­pe­ti­tion kept prices down for both new and used vehi­cles in the com­pact and mid­size car seg­ments. Con­sumers also con­tin­ued their move to mid­size CUVs, decreas­ing demand for mid­size cars.
  • Lux­u­ry Cars post­ed the largest pric­ing decrease of any seg­ment, down 3.8 per­cent in Decem­ber com­pared to the same month last year. Automak­ers offered attrac­tive lease terms for new lux­u­ry cars, putting price pres­sure on used vehi­cles as well.
  • Pick-ups and Vans both increased in pric­ing as the hous­ing recov­ery con­tin­ued to dri­ve demand for these vehi­cles, large­ly used by small busi­ness­es for com­mer­cial work. Pick­up pric­ing rose 3.4 per­cent and van pric­ing was up 1.2 per­cent in Decem­ber year over year.
  • SUV and CUV pric­ing con­tin­ued to drop. A decrease in demand for large SUVs pulled down the seg­ment. The mar­ket also had a greater sup­ply of CUVs as automak­ers increased pro­duc­tion of these vehi­cles for the new vehi­cle mar­ket. SUV and CUV prices were down 3 per­cent in Decem­ber, com­pared to the same month last year.

Whole­sale used vehi­cle prices should decline slight­ly in ear­ly 2014 but remain at healthy lev­els, Webb said. An increase in new car sales and off-leased vehi­cles will increase sup­ply but con­sumer demand also should remain high.

“We do not expect fun­da­men­tals to mate­ri­al­ly change in 2014, although a few mis­steps may occur along the way,” Webb said. “In the first quar­ter, for exam­ple, it’s pos­si­ble that whole­sale sup­plies may rise faster than expect­ed, and those vehi­cle seg­ments depen­dent on tax-refund-fueled demand may once again be dis­ap­point­ed by unpre­dictable, uneven, and rel­a­tive­ly low dis­burse­ments from the IRS.”

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