Talk of Free Fall Price Decline May be Premature, Manheim Says

Tom Webb
Chief Econ­o­mist
Man­heim

The Man­heim Used Vehi­cle Val­ue Index declined 1% in July from the pre­vi­ous month and increased 1.5% from a year ago. While it was the third straight month of decline in whole­sale pric­ing, talk of a free fall in pric­ing has been pre­ma­ture. Whole­sale prices have been trend­ing on a sec­u­lar down­ward since reach­ing their peak in May 2011; but the changes have been mod­est and sub­ject to sev­er­al up-cycles with­in the larg­er trend.

Here’s the lat­est Man­heim Used Vehi­cle Val­ue Index report

Price Col­lapse Feared Dur­ing Drop Pri­or to His­tor­i­cal Sea­son­al Weak­ness:
Col­lapse would also require sig­nif­i­cant alter­ing in labor mar­ket and cred­it con­di­tions, which appears to be unlike­ly.

While Used Sales Were Slow­er in July, it Shouldn’t Set Off Alarm Bells:
Deal­ers are con­tin­u­ing to report good turn rates and strong prof­its in used sales.

Whole­sale Price Decline for Most Lux­u­ry Cars Twice that of Over­all Mar­ket:
July also saw seg­ments with­in lux­u­ry that suf­fered even more, includ­ing entry lev­el and pre­mi­um units.

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