ATLANTA – Despite the pressures of an uncertain world economy and natural disasters that disrupted the automotive industry, the used-vehicle market proved to be a bright spot during the first half of 2011, according to Manheim Consulting. Retail used car sales volumes and dealer profitability increased, and the Manheim Used Vehicle Value Index climbed to a new record high.
These and other industry trends are analyzed in depth in Manheim’s Mid-Year edition of the Used Car Market Report, the definitive source of information and trends that shape the wholesale and retail used vehicle markets. The Report, which also includes industry commentary from Manheim Consulting chief economist Tom Webb and an interview with Manheim senior vice president Sue Boehlke on the way customers are using digital technology, was released today by Manheim Consulting.
The Mid-Year UCMR is available online at www.manheim.com/consulting. For the first time, those who purchase the Report ($99) not only will be able to download a PDF of the Report, but also will receive access to a free app which allows them to view the Report on iPhones, iPads, and Android devices.
“It is fair to say that few of us have ever witnessed a period like the first half of 2011,” Manheim president Sandy Schwartz writes in the Report’s introductory letter. “Early in the year, it seemed that the economy was following a predictable, if slow, recovery path. Credit was easier, and as more customers could afford to buy a used vehicle amid tight supply, wholesale prices moved higher. In the second quarter, we witnessed the combined impact of high fuel prices and the Japanese earthquake and tsunami on the used vehicle markets.”
In addition to chapters on dealers, used vehicle suppliers, the used vehicle industry, and a review and outlook, the Report includes three case studies into online and in-lane sales activity. Among the trends discussed in the Report:
- New vehicle sales were up 13 percent in the first half of 2011 over the same period last year, for an annualized sales rate of 12.6 million. A 17-percent increase in commercial fleet sales was offset by a 5-percent decline in rental sales.
- Total used vehicle sales were up 3.5 percent in the first half of the year compared to last year, including an 8.5-percent rise in Certified Pre-Owned vehicle sales – on pace for a record year. Over the first six months of the year, the 18.6 million used vehicle sales were composed of:
- 6.7 million franchised dealer sales
- 6.8 million independent dealer sales
- 5.1 million private party sales
THE WHOLESALE MARKET
- Wholesale used vehicle prices continued to rise in the first half of 2011 – the Manheim Used Vehicle Value Index (which is a mix-, mileage- and seasonally adjusted measurement of wholesale prices) reached a new high in May and retreated only slightly in June.
- The total volume of wholesale transactions declined by nearly 10 percent in the first half of 2011. Total National Auto Auction Association-auction volume is expected to dip below 8 million vehicles for the year.
- Dealers continued to emphasize faster inventory turns in the first half of 2011. For many, that meant stocking fewer units, buying vehicles more frequently and utilizing more sources. As a result, dealers accounted for nearly 55% of auction volume sold in the first half of the year, up from 44% over the same period a year ago.
ONLINE, DIGITAL ACTIVITY
- Manheim has seen a steady increase in the number of online bidders and the number of vehicles they purchase. The largest gains have come via OVE.com, which saw a 10% increase in buyers from January – June, 2011, compared with January – June, 2010.
- Visitor traffic to Manheim.com continued to increase in the first half of the year, with some months at or above 5 million visits.
- AutoTrader.com visitor traffic set a record at 17.4 million in January 2011, up more than 9 percent from a year ago.
- In the first half of 2011, rental companies purchased 788,400 units, down 5 percent from last year. However, the industry will increase its purchases in the second half of the year and in 2012, leading to an eventual increase in the supply of rental risk vehicles across all remarketing channels.
LEASING AND REPOSSESSIONS
- Total repossessions peaked at 1.9 million units in 2009 and declined by 19 percent in 2010 to 1.55 million units. Results for the first half of 2011 suggest that repossessions will fall by a similar percentage this year. That would push repossessions to 1.3 million units, their lowest level in more than a decade.
- After falling to a cyclical low of 1.1 million in 2009, new vehicle lease originations grew by more than 50 percent in 2010 to 1.7 million units. In the first half of 2011, that growth continued with an estimated 25-percent increase in originations. The full-year total is on pace to exceed 2.2 million units.
- Commercial and government fleets bought a combined 388,508 vehicles in the first half of the year, up 11.1 percent from last year.
- The average auction value of a mid-size commercial fleet vehicle at auction was more than $9,700 in the first half of 2011, up 18 percent from 2010. At the same time, the average mileage declined 7 percent to just less than 65,000 miles.