ATLANTA and CARMEL, IN – Average auction prices in November, according to ADESA Analytical Services´ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class were up 2.8 percent from year-ago levels, marking the eighth increase in the last nine months (following a modest decline in October). Average prices were up $136 (1.5 percent) compared to October. Overall, these movements indicate continued firmness in the wholesale used-vehicle-pricing environment. Prices for nearly new vehicles registered a modest drop (-0.4 percent), but this was a reversal of the trend seen in the previous three months when year-over-year price decreases got sequentially worse (-0.6 percent in August, -2.3 percent in September, and -3.4 percent in October).

For the fifth consecutive month, compact cars had the strongest year-over-year (y-o-y) price gains, and full-size SUVs had the sharpest y-o-y price declines. Average prices in both these categories had double-digit, year-over-year movements, though in opposite directions. High gas prices are clearly a major contributor to this trend, although factors such as the high new-vehicle incentives on large SUVs have also played a significant role.

The ADESA Auction Inventory Index continued to be at relatively high levels in November, partly due to the delay of off-rental returns resulting from hurricane activity in late summer. By November month-end, the index stood at 130.9 – up from 119.8 at the end of October and up 6.1 percent from its year-ago level of 123.4. ADESA Analytical Services estimates this represents approximately 33 days of auction sales, which, despite solid dealer demand, is sufficient supply to maintain downward pressure on wholesale prices as we approach the rest of the holiday season.

The ADESA Auction Dealer Optimism Index registered a significant gain (2.4 percent pts) in November. The index measures dealer “optimism” as the year-over-year change in dealer consignment “conversion rates” at ADESA auctions. The November index shows that dealers purchased a higher percentage of vehicles offered for sale by other dealers at ADESA auctions than they did during the same period in the prior year. ADESA Analytical Services believes the strong increase indicates that purchasing dealers are eager to stock up on units they plan to sell in time for the Christmas holidays or early in 2005. At the same time, selling dealers are finding attractive prices for unwanted units they´ve taken in trade or over-aged units that don´t suit their particular market.

At Manheim, wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) increased by 1.2 percent in November. Click to see chart. Before the seasonal adjustment, wholesale used-vehicle prices were up only marginally (0.1 percent), but it marked the first time in more than a decade that non-seasonally adjusted wholesale used-vehicle prices were higher in November than in October. The Manheim Used Vehicle Value Index now stands at 107.7, an increase of 0.8 percent from a year ago.

November´s rise was in stark contrast to the previous four months when used-vehicle prices basically showed no movement at all. click to see chart. The increase in wholesale used-vehicle prices was a response to the more vibrant retail market that has recently appeared as well as a reduction in the competitive pressure being applied by the new vehicle market. What is less clear is whether those shifts are temporary or permanent.