CARMEL, IN - Remarketers that elected to sell before year-end rather than wait for a seasonal price increase in January were rewarded with a greater-than-seasonal average wholesale price increase in December. This gain is on top of the usual benefits of selling vehicles sooner rather than later, including the opportunity cost of capital/time value of money, forgone depreciation and avoided interest expense, according to Tom Kontos, executive vice president, customer strategies & analytics, at ADESA.

Fortunately for remarketers who did elect to wait, January should again be a solid month price-wise, with used-vehicle supply continuing to be tight and retail demand maintaining its growth as the economic recovery continues, Kontos noted.

Dealers as well as remarketers can view the strength of new and used vehicle sales in December as a good precursor to retail demand during the tax season.

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in December averaged $9,939 — a 3.5-percent increase from November and a 10.2-percent increase from prior year.

Prices for all car and truck categories except full-size vans were up for the month, and all categories were up versus prior year. Full-size vans are a relatively small-volume segment at auction and small changes in factors such as seller type and vehicle condition month-to-month can have disproportional impacts on average prices. (This also tends to be true for full-size cars, which showed the largest gain in average prices for the month.)

Full-size vans also tend to reflect price trends seen in the medium-duty commercial van market, which has been soft due to weakness in construction, shipping and other applications that require these trucks. Compared to prior-year however, prices for this segment have rebounded nicely — perhaps an indication that construction and commerce are rebounding as the economic recovery gathers steam.

By seller type, manufacturers registered a 2.5-percent month-over-month price increase and a 26.6-percent year-over-year rise; fleet/lease consignors experienced a 0.7-percent sequential price decrease and a 15.3-percent annual increase. Dealers saw a 2.2 percent average price increase versus November and a 23.2 percent uptick versus December 2008.

ADESA Analytical Services estimates that auction industry inventory levels stood at 38 days at year-end compared to a record 73 days during December 2008 — an indication of tight supply. Conversion rates (units sold as a percentage of units offered) were above the 60-percent industry norm, as demand remains strong for available units.

Based on data from CNW Marketing/Research, retail used vehicle sales in December were up 7.0-percent month-over-month for franchised dealers, 9.5-percent for independent dealers and 8.2-percent overall. Certified used vehicle sales were up 22.3-percent versus November but down 17.9 percent compared to December 2008, according to Autodata. For the full year, certified used vehicle sales totaled over 1.5 million units, down 9.8-percent from 2008’s nearly 1.7 million units. The consumer price index for used vehicles rose by 5.8 percent year-over-year in November (latest available) based on data from the Bureau of Labor Statistics.