The auction vehicle market appears to be finding a balance between buyers and sellers as a long upward pressure on prices may be leveling off, according to trends in the 2Q AutoIMS Industry View report, which accumulates data from hundreds of auction nationwide.
“The average floor price ticked up, but conversion rate and sale price have moderated, suggesting that seller expectations are finally getting ahead of actual results,” AutoIMS said in a summary accompanying the report.
Auctions See Better Market Action
Overall, the report indicates good news for auctions, which are seeing more activity, said Joe Miller, the executive vice president for client success at AutoIMS, an automotive remarketing technology firm based in Atlanta.
The numbers show more commercial and trade-in vehicles moving into the market to complement the dealer-sourced vehicles that auctions have been handling, Miller said. “It could be that all sources are now feeding more into the auctions. When we see the average sale price, grade and model year improve, that tells me there’s more need for a wholesale channel for nicer assets during the last 12 months.”
Report Highlights Possible Pivots
The quarterly report aggregates data from 750+ auctions across North America that collectively take in vehicles from more than 1,000 consignors.
Among the key highlights:
- The conversion rate, percentage of vehicles sold on a day in which they were offered, fell from 72% to 63%, in the second quarter year over year.
- The average sale price hit $16,624 in the second quarter, compared to $16,096 in 2Q 2021.
- Gross sales price as a percentage of floor price fell to 98% in the second quarter, compared to 102% the same quarter last year. That means many used vehicles are selling below asking price.
- The market is also seeing more recent model used vehicles, averaging a 2015.3 model year in the second quarter compared to 2014.6 in 2Q 2021.
- Average mileage of vehicles sold rose to 90,081 miles in 2Q 2022, compared to 83,546 miles in 2Q 2021.
- The quarterly YOY average damage estimate rose from $1,807 to $2,278.
- The average charge for auction fees dipped from $396 to $378 over the same period.
The auction used vehicle market appears to “finding equilibrium” after more than a decade of economic recovery and stimulus-fueled growth, the report concludes. Inflation, supply chain constrains, and consumer sentiment are leveling off the hot car market.
“In June we see the average mileage turning back down for the first time in a while, indicating better-condition vehicles are starting to make more of an appearance” at auctions, the summary states. Auction charges range 4% lower than last year, but the gap may be even bigger when adjusting for inflation.
One question the report raises is whether auctions will spend more money on reconditioning. In the second quarter, the market saw two divergent indicators: Higher average damage estimates, but lower average auction-related expenses and fees.
“If you see fees tick up or down, that can correlate to more or less work being done to vehicles,” Miller said. Does that mean more damage on average but less investment in the cars for now, or will the damages coupled with more diverse vehicle volume eventually drive more reconditioning?
Regardless, consignors and auctions are seeing great demand for vehicles given wider economic and market pressures, including inflation, Miller said. “A lot of consignors are still calling the shots with price and don’t need to do extra work on the vehicles.”
Miller will be asking those questions and others at the upcoming International Automotive Remarketers Alliance Summer Roundtable in Nashville, Aug. 16-18, where he will host a panel of leading industry economists: Tom Kontos of KAR Global, Alex Yurchenko of Black Book, and Jonathan Smoke of Cox Automotive.