CARMEL, IN – Current conditions in the wholesale market can best be characterized as “mixed,” according to Tom Kontos, ADESA’s chief economist. For sellers of late-model used vehicles in factory and fleet/lease auctions, sales prices and conversion rates (units sold as a percentage of units offered) have generally been strong in recent weeks.
On the other hand, average sales prices in the dealer consignment lanes at auctions have been somewhat soft. With sales by auto manufacturers making up a smaller percentage of total sales and dealer consignment sales making up a bigger piece of the pie, prices overall were 1.1-percent lower in March versus March of 2006, although they rose 2.6 percent compared to February, reported Kontos.
The key driver to any strength the wholesale market is exhibiting relatively short supply rather than strong retail demand. ADESA Analytical Services estimates that total auction industry sold volumes in March on a same-store basis were down 3.8-percent year-over-year, primarily due to a double-digit drop in manufacturer sales.
In the weeks ahead, ADESA Analytical Services expects wholesale used-vehicle prices to continue to rise on a monthly basis according to their seasonal patterns, but to be down on a year-over-year basis due to relatively weak retail demand and overall steady auction supply consisting of proportionately more dealer consignment units and fewer factory vehicles.