CARMEL, IN and ATLANTA – Average auction prices in February, according to ADESA Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, were up 5.2 percent from year-ago levels. Average prices were up 1 percent compared to January.

For the eighth consecutive month, compact cars had the strongest year-over-year price gains (19 percent), and full-size SUVs had year-over-year price declines (-5.2 percent). This may be an indication that consumers are seeking more fuel-efficient vehicles and abandoning large SUVs.

The ADESA Auction Inventory Index fell below 100 for the first time since last August. At February month-end, the index stood at 96.3 – down from 147.3 at the end of December and down 5.9 percent from its year-ago level of 102.4. ADESA Analytical Services estimates this represents approximately 26 days of auction sales. The relatively low inventory levels help set the stage for continued strong pricing in March if retail demand continues to be vibrant.

The ADESA Auction Dealer Optimism Index registered another significant gain (3.1 percentage points) in January. The February 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 – another factor indicating retail demand strength.

At Manheim, wholesale used-vehicle prices on a mix, mileage, and seasonally adjusted basis increased for the sixth consecutive month in February. The Manheim Used Vehicle Value Index rose to a level of 110.3, up from 108.8 in January. Wholesale prices over the past year have risen 5.2 percent and have increased 7.7 percent from the April 2003 cyclical trough. The monthly gain in wholesale prices for February was 3.5 percent before the seasonal adjustment and 1.4 percent after statistically accounting for the normal seasonal improvement that occurs between January and February.

The continuing improvement in wholesale prices is a reflection of the vibrant retail used-vehicle market that is benefiting from a stronger labor market (especially in the mainstream demographic groups that underpin the used vehicle market), less pressure from new vehicle pricing, and the recent increase in tax refunds flowing back to consumers.