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May 2017 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Average wholesale prices in May were flat versus April but up on a year-over-year basis, primarily due to the strength of truck prices and a younger mix resulting from off-lease supply growth. As introduced last month, a drill-down into the data clearly reveals price softening when accounting for sale type and vehicle age, model class and mileage.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle averaged $11,138 -- flat compared April up 3.9% relative to May 2016. The rise came mostly from larger vehicles, including cars, midsize SUVs CUVs and fullsize pickups. (Note: the year-over-year growth minivan prices is exaggerated by newer models as discussed in January’s report.)< P>

Average wholesale prices for used vehicles remarketed by manufacturers were up 3.3% month-over-month and up 4.9% year-over-year. Prices for fleet/lease consignors were down 0.2% sequentially and up 3.5% annually. Average prices for dealer consignors were up 0.2% versus April and up 5.9% relative to May 2016.

Last month, we introduced the following analysis, which once again shows significant price softening when one holds constant for sale type, model-year age, mileage, and model class segment:

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

Model Class      May-17       May-16         $        %   

Midsize Car      $11,595       $12,280    ($685)   -5.6

  Midsize SUV/CUV     $20,225       $20,450    ($225)   -1.1


We will continue to monitor and report this information as a supplement to the averages traditionally provided here.

Based on NADA data, May retail used vehicle sales by franchised and independent dealers were down a combined 2.8% year-over-year. May CPO sales were up 7.0% 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 - May 2017
Wholesale Price Data by Model Class Segment History 2015-052017
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 - May 2017