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Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Further concrete evidence of price softening appeared in February as prices uncharacteristically, and unseasonably, softened rather than firmed versus January. Prices fell for virtually all model years and all model classes. Prices were still up on a year-over-year basis, but this was again primarily due to the influx of younger off-lease units.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in February averaged $10,688 – down 2.3% compared to January but up 4.8% relative to February 2016. Almost all model classes showed monthly declines, although the slight increase to compact car prices was encouraging, as this segment has been especially hard-hit by oversupply in recent years. (Note: the year-over-year growth in minivan prices is exaggerated by newer models as discussed last month.).

Average wholesale prices for used vehicles remarketed by manufacturers were down 0.1% month-over-month and down 1.0% year-over-year. Prices for fleet/lease consignors were down 3.4% sequentially but up 3.6% annually. Within this segment, however, rental risk units showed month-on-month and year-on-year price declines. Average prices for dealer consignors were down 1.2% versus January but up 2.5% relative to February 2016.

Based on NADA data, retail used vehicle sales by franchised and independent dealers were down 3.8% month-over-month, but up 6.5% year-over-year. February CPO sales were up 9.8% month-over-month but flat year-over-year, according to figures from Autodata.

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 - February 2017
Wholesale Price Data by Model Class Segment History 2015-022017
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 - February 2017