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March 2016 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Signs of the traditional Spring tax-season market appeared in March, as average wholesale prices rose both on an sequential and annual basis. Yet price softening driven by supply growth remains a visible undercurrent as totals and averages are broken down into model class, sale type and age buckets.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in March averaged $10,815 – up 6.0% compared to February and up 1.7% relative to March 2015. Continuing a now-familiar pattern, car prices on a year-over-year basis were down, while truck prices were up, particularly for fullsize SUVs, CUVs, and Pickups.

Average wholesale prices for used vehicles remarketed by manufacturers were up 1.9% month-over-month but down 1.0% year-over-year. Prices for fleet/lease consignors were up 6.8% sequentially but down 2.4% annually. Within that category, off-rental risk units had significant year-over-year price declines despite lower average mileage. Ditto for prices of three-model-year-old vehicles, a proxy for off-lease vehicles. Two- and four-year-old vehicles also saw major year-over-year price declines, as did older models. Dealer consignors saw a 4.1% price increase versus February and a 1.5% increase relative to March 2015.

Data from NADA showed a 12.5% year-over-year decrease in retail used vehicle sales by franchised dealers and a modest 0.6% increase for independent dealers in March (possibly due to the timing of Easter), but both were up significantly on a month-over-month basis. March CPO sales were up 15.4% month-over-month and 9.6% year-over-year, the strongest month ever, 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 - March 2016
Wholesale Price Data by Model Class Segment History 2015-032016
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 - March 2016