Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) increased 0.8% in December from November, according to the Manheim Used Vehicle Value Index (MUVVI) released Jan. 9, which rose to 219.3, down 14.9% from a year ago. This was the largest annualized decline in the series’ history.
December’s increase was driven by the seasonal adjustment. The non-adjusted price change in December was a decline of 1.9% compared to November, moving the unadjusted average price down 13.1% year over year. With the December update, the Manheim Index was rebased to January 1997, and the historical index values were restated.
In December, Manheim Market Report (MMR) values saw larger-than-normal declines, culminating in a 2.2% total decline in the Three-Year-Old Index over the last four weeks. During December, daily MMR Retention, which is the average difference in price relative to the current MMR, averaged 98.6%, meaning market prices were below MMR values. The average daily sales conversion rate increased to 50.7% but remained below normal for the time of year. For example, the daily sales conversion rate averaged 52.2% in December 2019. The lower conversion rate indicated that the month saw buyers with more bargaining power than what is typically seen for this time of year.
All eight major market segments once again saw seasonally adjusted prices that were lower year over year in December. Vans had the smallest decline at 12%, followed by pickups, sports cars, and compact cars at 12.2%, 12.6%, and 13.5%, respectively. The other four segments’ prices were lower than the industry. Compared to November, two of the eight major segments’ performances were down. Midsize cars lost 0.3%, and compact cars lost 0.2%. Five of the remaining six segments were up between 0.4% and 2.2%.
Used Retail Sales Estimates Declined in December, Similar to Last Year
Leveraging a same-store set of dealerships selected to represent the country from Dealertrack, Manheim initially estimates that used retail sales declined 7% in December from November and that used retail sales were down 10% year over year, which was the same as November’s performance.
Using estimates of used retail days’ supply based on vAuto data, December ended at 52 days’ supply, down from 54 days at the end of November but slightly higher than how December 2021 ended at 51 days. Leveraging Manheim sales and inventory data, wholesale supply is estimated to have ended December at 31 days, up two days from the end of November and up five days from how December 2021 ended at 26 days.
December’s total new-light-vehicle sales were up 4.9% year over year, with the same number of selling days as December 2021. By volume, December new-vehicle sales were up 12.2% from November. The December sales pace, or seasonally adjusted annual rate (SAAR), came in at 13.3 million, a 4.7% increase from last year’s 12.7 million but down 6.3% from November’s revised 14.2 million pace.
Combined sales into large rental, commercial, and government fleets were up 47% year over year in December. Sales into rental fleets were up 100% year over year, sales into commercial fleets were up 29%, and sales into government fleets were up 13%. Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 1.1%, leading to an estimated retail SAAR of 12 million, down 0.5 million from last month’s pace, or down 4.7%, but up 0.8 million from last year, or 7.2%. The fleet share of 14.2% was down 1.5% from last month and was up 3.3% from last year.
Rental Risk Prices Declined in December
The average price for rental risk units sold at auction in December was down 5.3% year over year. Rental risk prices were down 3.4% compared to November. Average mileage for rental risk units in December (at 55,700 miles) was down 18.7% compared to a year ago but up 3.1% from November.
Measures of Consumer Confidence Higher in December
The Conference Board Consumer Confidence Index increased 6.8% in December, as both present situation and future expectations measures improved. Plans to purchase a vehicle in the next six months improved slightly and remained up year over year. The confidence index has not declined as much this year as the sentiment index from the University of Michigan, but that series also improved in December. The Michigan index increased 5.1%, driven primarily by improvement in the expectations index, which was up 7.7%. Consumers’ views of buying conditions for vehicles improved to the second-best level this year. The daily index of consumer sentiment from Morning Consult also measured improving sentiment in December, as that index was up 4% for the month. Sentiment improved in December as the price of gasoline fell to its lowest level in more than a year before increasing slightly at month’s end. According to AAA, the national average price for unleaded gas was $3.21 per gallon on Dec. 31 and down 2% year over year.
Manheim Used Vehicle Value Index Reindexed to 1997
With the December update, the Manheim Used Vehicle Value Index was adjusted to improve accuracy and consistency across the data set. The starting point for the MUVVI was adjusted from January 1995 to January 1997. The index was then recalculated with January 1997 = 100, whereas prior reports had 1995 as the baseline of 100. All monthly and yearly percent changes are identical; only the index starting point was adjusted.