Wholesale used vehicle prices increased in May, suggesting dealers have continued to achieve efficiency gains that allow them to bid-up auction prices even as gross margins narrow.

The May increase, which followed an April increase, resulted in a year-over-year gain – the first since December of last year, according to Manheim’s Used Vehicle Value Index

Total used retail unit volumes rose 6% in the first four months of 2016. Preliminary numbers suggest sales rose again in May. Likewise, CPO sales jumped 6% in the first four months of the year, increasing again in May.

New vehicle sales: New car and light-duty trucks sold at a seasonally adjusted annual selling rate (SAAR) of 17.4 million in May. The number was an improvement over April’s 17.3 million pace, but below last May’s 17.6 million.

For the first five months of 2016, the SAAR averaged a modest 17.2 million, despite heavier fleet sales. In the first five months, new vehicle purchases increased 8% for rental car companies, 11% for commercial fleets, and 38% for government agencies.

New vehicle inventory levels are reasonable, but the mix is imbalanced. The new vehicle market is expected to have a slightly negative impact on used vehicle residuals in the coming months.

Unadjusted prices: A straight average of auction prices remained well above year-ago levels in May due to the share shift toward commercial consignment and lower average mileage for both dealer and commercial consignment.