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April 2017 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Average wholesale prices in April were up on both a month-over-month and year-over-year basis. As has been stated repeatedly in previous months, however, much of these supposed increases in used vehicle values are the result of strength in truck prices and growth in off-lease volumes. An analysis of sales prices by sale type, model-year age, mileage and model class segment reveals that prices actually fell in April on both a month-over-month and year-over year basis (please see “Details” below) for two bellwether model classes. This drill-down is more reflective of the downward pressure of supply growth on used vehicle values.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in April averaged $11,141 -- up 2.2% compared to March and up 2.5% relative to April 2016. Compact, mid-size and luxury cars all showed year-on-year price declines of 2.0% or more, while most of the truck segments registered significant year-over-year gains.

Average wholesale prices for used vehicles remarketed by manufacturers were up 2.5% month-over-month and up 3.7% year-over-year. Prices for fleet/lease consignors were up 1.5% sequentially and up 3.2% annually. Average prices for dealer consignors were up 5.1% versus March and up 3.9% relative to April 2016.

Breaking the data down by age shows that prices were down 1.3% for three-model-year-old units (a good proxy for off-lease units). Moreover, a further drill-down into the data reveals the following results for April:  

 

Fleet/Lease Sales of Three-MY-Old Units w/36K-45K Miles
                                              Average Prices         Y/Y     Var

Model Class        Apr-17           Apr-16        $           %

Midsize Car      $11,715           $12,459   ($744)   -6.0

  Midsize SUV/CUV     $20,192           $20,945   ($753)   -3.6


 

These results are based on holding constant for sale type, model-year age, mileage and model class segment. Midsize cars and midsize SUV/CUVs are among the highest-selling model classes at auction and are good benchmarks for overall market performance.

April CPO sales were down 3.6% month-over-month and up 0.7% 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 - April 2017
Wholesale Price Data by Model Class Segment History 2015-042017
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 2017