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June 2016 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Average wholesale values fell again on a month-over-month basis in June, but they remain up on a year-over-year basis largely because of the continued price strength of trucks. A portion of the month-over-month price decline can be explained by the usual falloff in prices from May to June, typifying the transition from the strong spring/tax season to the less robust summer months. However, incentive activity, which has been relatively benign, may be on the rise, as manufacturers look to boost waning new vehicle sales -- a pattern that bears watching. In the meantime, retail used vehicle sales were strong in June, which once again provided demand-side support for wholesale values receiving downward pressure from supply growth.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in June averaged $10,556 – down 1.5% compared to May but up 3.3% relative to June 2015. Car model classes again took the bigger month-over-month hit and were down on a year-over-year basis while trucks were up.

Average wholesale prices for used vehicles remarketed by manufacturers were up 5.7% month-over-month and up 2.0% year-over-year. Prices for fleet/lease consignors were down 1.1% sequentially but up 0.7% annually. Dealer consignors registered a 1.1% decrease versus May but a 3.6% increase relative to June 2015.

Data from NADA showed a 5.3% year-over-year increase in retail used vehicle sales by franchised dealers and a 9.1% increase for independent dealers in June, while both were up significantly up month over month. June CPO sales were up 0.8% month-over-month and up 5.0% 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 - June 2016
Wholesale Price Data by Model Class Segment History 2015-062016
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 - June 2016