Manheim Used Vehicle Value Index — July 2015

Whole­sale used vehi­cle prices (on a mix-, mileage-, and sea­son­al­ly adjust­ed basis) moved mod­est­ly high­er in July. This brought the Man­heim Used Vehi­cle Val­ue Index to a read­ing of 124.1 in July. Giv­en that sea­son­al­ly adjust­ed prices were declin­ing at this point last year, the Index’s year-over-year change moved from -0.1% in June to +1.1% in July.

The con­tin­ued strength in whole­sale pric­ing reflects a retail used vehi­cle mar­ket where deal­ers are enjoy­ing high­er through­put, achiev­ing ever-greater effi­cien­cies, and still grow­ing F&I income. Although new vehi­cle trans­ac­tion prices con­tin­ue to rise, incen­tive activ­i­ty (both trans­par­ent and opaque) is on the rise. This like­ly left the new vehi­cle mar­ket net neu­tral with respect to its impact on whole­sale pric­ing in July. This benign envi­ron­ment may be neg­a­tive­ly impact­ed by past and expect­ed exchange rate move­ments and shift­ing glob­al demand.

New vehi­cle sales sur­prise to the upside. In July, new cars and light-duty trucks sold at a sea­son­al­ly adjust­ed annu­al rate (SAAR) of 17.5 mil­lion. This was bet­ter than expect­ed, and it brought the SAAR on a three-month mov­ing aver­age basis to 17.35 mil­lion, which is high­er than the cur­rent con­sen­sus fore­cast for full-year sales. For the first sev­en months of 2015, the SAAR aver­aged 17 mil­lion.

The aver­age new vehi­cle trans­ac­tion price was $33,453 in July, accord­ing to Kel­ley Blue Book. That was up 2.6% from a year ago, and flat rel­a­tive to June. Accord­ing to Auto­da­ta, incen­tive spend­ing was up 7% from a year ago – and, of course, you nev­er know what the true lease resid­ual sup­port will end up being until end-of-term.

Used vehi­cles: sol­id sales with strong prof­its. Pre­lim­i­nary esti­mates sug­gest that total used vehi­cle retail trans­ac­tions rose again in July. For cer­tain, we know that CPO rose 11% dur­ing the month and 12.3% year-to-date.

In the sec­ond quar­ter of 2015, the sev­en pub­licly trad­ed deal­er­ship groups post­ed their 24th con­sec­u­tive quar­ter­ly increase in same-store retail used unit sales. The sales-weight­ed gain was 6.9% – the best since the fourth quar­ter of 2013. And, despite nar­row­ing mar­gins, record prof­its were achieved.

Rental risk prices slip again. Auc­tion prices for rental risk units (adjust­ed for broad shifts in mar­ket class and mileage) declined for the fourth con­sec­u­tive month in July. On a year-over-year basis, prices were down 4.3%. Unad­just­ed prices were down a more sub­stan­tial 11.7% over the past year, and the aver­age price slipped below $14,000 for the first time since Octo­ber 2011.

Auc­tion vol­umes for rental risk units in July con­tin­ued to exceed their year ago lev­el, but were in line with the pace of 2013 and 2012. New vehi­cle sales into rental increased less than 1% in July, result­ing in a year-to-date gain of 5.9%.

Mar­ket seg­ment and con­sign­or seg­ments. Pick­ups, SUVs, CUVs, and vans con­tin­ued to have high­er prices year-over-year. Lux­u­ry cars were also up, but the com­par­i­son was against weak year-ago pric­ing. Com­pact car prices were down 6.7% over the past year.

A straight aver­age of auc­tion pric­ing was up year-over-year for both com­mer­cial­ly con­signed and deal­er-con­signed units. Dur­ing the month, the aver­age price for deal­er-con­signed units defied sea­son­al forces and increased from June due to low­er aver­age miles.

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