– Average wholesale used-vehicle prices rose sharply in November, registering their strongest year-over-year increase of 2005, according to Tom Kontos, VP, ADESA Analytical Services, ADESA Inc. Reasons for the increase include:
1.A shortfall of off-rental supply. Dealers desiring to meet current and anticipated retail used vehicle sales demand found it tougher to find late-model units, especially off-rental units, than usual for this time of year. Many off-rental units that would have normally returned to auction by now remain in service in hurricane-stricken areas as replacement and relief vehicles.
2.Minimal disturbance from the new-vehicle market. Year-end new vehicle clearance programs did not put additional downward pressure on used-vehicle prices because these new discounts were already “baked-in” to used-vehicle prices during the summer’s employee pricing events. Nor did the year-end discounts appear to generate exceptionally strong new-vehicle sales and high trade-in volume that might have dampened retail and wholesale used-vehicle demand.
3.Continued declines in gasoline prices. Falling gas prices have helped full-size SUVs achieve two straight months of average price increases, while compact car prices have modestly declined.
As the year draws to a close, these factors remain largely in place. As a result, the softening of used-vehicle prices that took place in the summer and early fall of 2005, induced primarily by employee discounts on new vehicles, now appears to have been only a brief hiatus. Provided retail used-vehicle sales by independent dealers (down 8.0 percent year-over-year in November) improve, the recovery of the used-vehicle market that began in the spring of 2003 has a good chance of continuing into early 2006, said Kontos.
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