Solid Retail Used Vehicle Demand Not Enough to Offset Price Drop

Tom Kon­tos
Exec­u­tive Vice Pres­i­dent & Chief Econ­o­mist
ADESA Ana­lyt­i­cal Ser­vices

Soft­en­ing whole­sale prices clear­ly con­tin­ued into August as off-lease vol­ume grows; prices were down for first since Jan­u­ary on year-over-year basis. Retail used vehi­cle sales is mak­ing up for some of it with strong demand espe­cial­ly for cer­ti­fied pre-owned (CPO) units. There has been a tem­po­rary lull com­ing from strong retail new vehi­cle demand; retail used sales should come back strong in com­ing months giv­en improv­ing econ­o­my and job growth. How­ev­er, used vehi­cle prices should con­tin­ue to decline as sup­ply out­paces demand.

Here’s the lat­est edi­tion of Kon­tos Kom­men­tary

Whole­sale Prices at $9,592 — Down 1.6% from July and 0.4% from August 2013:
August prices for com­pact cars, full­size vans and mini, mid­size and large SUVs were up from July, while all oth­er seg­ments were down.

Man­u­fac­tur­er Sales Saw Weak­er Demand for Off-Rental Pro­gram Vehi­cle Inven­to­ries:
Prices for off-rental “risk” units with­in fleet/lease con­sign­or seg­ment were again down sig­nif­i­cant­ly.

Retail UV Sales Down 14.8% Month-Over-Month and Down 9.4% Year-Over-Year:
CPO sales were up 11.4% ver­sus July and up 11.1% from the pri­or year.

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