December 2015 Kontos Kommentary
Current Used Vehicle Market Conditions and Outlook
2015 was largely a year when strong retail used vehicle and CPO demand, benign new vehicle incentive activity, and the embrace of upstream as well as traditional auction processes among remarketers diluted the usual negative impact of growing supply on wholesale values. Further masking that impact was the displacement of off-rental program vehicle volume that appeared in the first half of the year rather than the last quarter of 2014. These high-dollar, late-model units biased average wholesale prices upward for much of the year. Nevertheless, supply growth underlies the wholesale price softness seen later in the year and most evidently in December, as prices fell by upwards of one percent on both a month-over-month and year-over-year basis.
(More information on annual results and trends in 2015 will be provided in the year-end edition of Pulse.)
According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in December averaged $9,763 – down 1.2% compared to November and down 1.0% relative to December 2014. Minivans were the only model class segment that showed a significant month-over-month increase, and in general, prices in the truck classes declined less than for cars and crossovers.
Average wholesale prices for used vehicles remarketed by manufacturers were up 1.6% month-over-month but down 3.5% year-over-year. Prices for fleet/lease consignors were down 0.1% sequentially and down 0.7% annually. Within that category, off-rental risk units had modest month-over-month and year-over-year price increases, while prices for three-model-year-old vehicles, a proxy for off-lease vehicles, were down significantly both month-over-month and year-over-year. Dealer consignors saw a 2.0% price decrease versus November and a 1.2% decrease relative to December 2014.
Data from NADA showed a 6.4% year-over-year increase in used vehicle sales by franchised dealers and an 11.7% increase for independent dealers in December, and both were up on a month-over-month basis as well. December CPO sales were up 23.3% month-over-month and 13.1% year-over-year, according to figures from Autodata. This closes another record year for certified sales, which exceeded 2.5 million units.
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 - December 2015
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