Wholesale Price Softening Continued in May

The softening wholesale pricing environment reported on by ADESA continued in May, with prices falling again on a year-over-year basis as they did in February, March, and April when the price-elevating impacts of Superstorm Sandy subsided. 

"Unlike the previous three months, however, prices fell on a month-over-month basis, indicating that the Spring/Tax Season is winding down, or already has," according to Tom Kontos, EVP and chief economist for ADESA Analytical Services. "Still, retail sales of new, CPO and used vehicles in May were impressive and, as this translates into demand for returning supplies of used vehicles, will cushion the fall in 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 May averaged $9,811 – down 2.8 percent compared to April and 4.5 percent relative to May 2012. The 4.5 percent year-over-year decline matched April’s decline.

Unlike April, however, the softening price environment in May did not appear to discriminate between cars, crossovers, SUVs, and trucks, as all these groups saw losses in value whereas SUVs showed some price strength in April.  One notable exception is fullsize pickups (up 0.1 percent m/m and 5.2 percent y/y, which appear to be benefitting from an improving home construction market.

Prices for used vehicles remarketed by manufacturers were up 1.6 percent month-over-month, but down 4.5 percent year-over-year.  Prices for fleet/lease consignors were down 2.1 percent sequentially, and down 1.2 percent annually. Dealer consignors saw a 2.4 percent average price decrease versus April 2013, and a 5 percent downturn versus May 2012.

Based on data from CNW Marketing/Research, retail used-vehicle sales were down 2.3 percent year-over-year for franchised dealers and 7.2 percent for independent dealers in May, although both dealer types saw double-digit month-over-month increases.  Sales of certified pre-owned (CPO) vehicles were up 6.1 percent month-over-month and 19.2% year-over-year based on figures from Autodata.

¹The analysis is based on nearly 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.