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April 2018 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Average wholesale used vehicle prices registered their second consecutive year-over-year price decline in April. However, April prices were seasonally strong, despite softer retail demand. Prices appeared to be particularly strong for off-lease vehicles, which is testimony to the effectiveness of upstream sales in preventing oversupply of these units at physical auctions.


Details

 

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in April averaged $11,116 – up 2.7% compared to March but down 0.2% relative to April 2017. Average prices were down on a year-over-year basis for both cars and trucks, but luxury cars and minivans were segments with significant volume that had strong year-over-year price gains.

When holding constant for sale type, model-year age, mileage, and model class segment, prices were up on a year-over-year basis for both midsize cars and midsize SUV/CUVs, as seen in the following table::

 

 

 

This analysis indicates that wholesale values for off-lease units are holding up well despite the overall softening market trend, and is evidence of the effectiveness of new remarketing approaches in redistributing supply into various sales channels.

Average wholesale prices for used vehicles remarketed by manufacturers were up 4.6% month-over-month and up 11.5% year-over-year. Prices for fleet/lease consignors were up 2.3% sequentially and up 5.8% annually. Average prices for dealer consignors were up 4.5% versus March and down 1.5% relative to April 2017.

Based on NADA data, retail used vehicle sales by franchised dealers were down 12.6% year-over-year, and were down 12.0% for independent dealers. April CPO sales were down 14.6% from the prior month and down 5.8% year-over-year, according to figures from Autodata. (It should be noted that both the NADA and Autodata sales numbers are based on fewer selling days in April 2018, which tends to overstate the declines.) On a year-to-date basis, CPO sales are up 1.5% versus last year.

 

1 The analysis is based on over six million annual sales transactions from over 150 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. ADESA Analytical Services segregates these transactions to study trends by vehicle model class.

The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to KAR Auction Services, Inc. The views and analysis are not the views of KAR Auction Services, its management or its subsidiaries; and their accuracy is not warranted. The statements contained in this report and statements that the company may make orally in connection with this report that are not historical facts are forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “bode”, “promises”, “likely to” and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the company’s Securities and Exchange Commission filings. The company does not undertake any obligation to update any forward-looking statements.

Wholesale Price Data by Model Class Segment - April 2018
Wholesale Price Data by Model Class Segment History 2015-042018
Wholesale Price Data by Model Class Segment - Full History 2011 - 012016
ADESA Analytical Services Selected Model Class Segments
Wholesale Price Data by Model Class Segment - Full History 2000 - June 2012

Kontos Kommentary - April 2018