Current Used Vehicle Market Conditions and Outlook

Summary

Wholesale prices were “steady as she goes” in December after mild seasonal softening in November. Retail new and used vehicle demand in December closed the year on a positive note and provided support for wholesale prices, especially in light of continued tight used vehicle supply.

We have often commented here and elsewhere that used vehicle sales tend to be more “recession-resistant” than new vehicle sales, and 2011 bore out that axiom. Retail used vehicle sales have now more than recovered the ground they lost during the recession and had their best year since 2006 (27.6 million in 2011 versus 24.5 million in 2009 and 27.4 million in 2006). By contrast, new vehicle sales, while increasing significantly since hitting bottom in 2009 (12.8 million in 2011 versus 10.4 million in 2009), remain well below pre-recession levels (16-17 million). Still, the improvement in new vehicle sales is an encouraging sign for both the economy and for future used vehicle supply.

Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class¹, wholesale used vehicle prices in December averaged $9,878 – up 0.1% compared to November and up 0.5% versus December 2010. Price drops tended to be concentrated in the truck segments, although compact cars also took a bit of a hit during the month.

Manufacturers registered a 2.5% month-over-month price increase and a 4.4% year-over-year rise. Fleet/lease consignors experienced a 1.9% sequential price decrease and a 1.5% annual increase. Dealer consignors saw a 1.3% average price increase versus November and a 3.4% uptick versus December 2010.

Based on data from CNW Marketing/Research, retail used vehicle sales in December were up 6.9% year-over-year for franchised dealers and 14.3% for independent dealers. On a month-over-month basis retail used vehicle sales were up more than 16% for the two groups combined. Certified used vehicle sales in December were up 14.2% versus November and up 14.1% versus prior year according to Autodata.