Wholesale Car Prices Declining in Q1

April 8, 2016
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Data from January to March has shown that wholesale pricing is down and sales are up for dealers, marking a good start for the used car industry so far in 2016. 

The Manheim Used Vehicle Value Index for March, which measures wholesale prices adjusted for mix, mileage, and season, fell for the third consecutive month. Its current level is 1.6% less than March of last year.

Additional factors in Manheim's prediction include sales figures and economic outlook. According to NADA, franchised and independent dealers had double-digit gains in used vehicle sales in January and February. Employement rose by 215,000 jobs in March, making a total of 13.9 million jobs that were created over the past six years. These favorable economic conditions indicate that more customers with good credit are available. This is reflected in certified pre-owned sales, which increased 5.1% in Q1 and 9.6% in March alone.

Notable changes in wholesale pricing for March 2016 versus March 2015 included compact car prices down 9.1%; mid-size cars decreased 1.7%; pricing for pickups is up 7.4% due to lower gas prices; van prices were lower; luxury car wholesale pricing poor (down 3.4% after stabilizing at the end of 2015); and SUVs and CUVs down 2% but increase of vehicle miles of travel.

“While fundamentals suggest the current pricing trend will last longer than the earlier downturns in pricing in this cycle, the year as a whole is setting up well and we may be able to avoid extreme volatility in wholesale pricing,” said Tom Webb, chief economist for Cox Automotive.

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