Average auction prices in August were up from year-ago levels for the sixth month in a row, but were lower than in July. According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, average auction prices in June were up 1.4 percent from year-ago levels, but down 2.2 percent relative to the previous month. As in July, compact cars had the strongest year-over-year price gains, and full-sized SUVs had the sharpest year-over-year price declines. Average prices in both these categories had double-digit, year-over-year movements, though in opposite directions. This indicates that dealers continued to be sensitive to the needs of customers seeking more fuel-efficient used vehicles.

According to CNW Marketing/Research, retail used-vehicle sales in August were up 6.1 percent -- the 14th increase in the last 15 months. Independent dealers continued their recovery, with year-over-year retail sales from this important group of auction attendees rising 10.1 percent in August.

The ADESA Auction Inventory Index was higher than its year-ago level for the second month in a row. The index stood at 97.1 at August month-end – up 3.5 percent from a year-ago level of 93.8. ADESA Analytical Services believes this rise indicates a gradual build-up of inventories as the traditional fall de-fleeting season approaches.

The ADESA Auction Dealer Optimism Index also registered its second straight increase in August. The index measures dealer “optimism” as the year-over-year change in dealer consignment “conversion rates” at ADESA auctions. The August 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. ADESA Analytical Services believes this is primarily due to continued strong activity in dealer lanes at auctions resulting from a relative scarcity of off-lease volumes in auctions’ “fleet-lease” lanes.

In summary, retail used-vehicle demand remains strong, while supplies of off-lease units continue to fall, the combination of which is helping wholesale prices firm even in the face of high new-car incentives. Exceptions to this tend to be concentrated in segments where high gasoline prices and other economic concerns have reduced demand. Sellers are bringing slightly more units to auction as we approach fall, and so far they have found a generally ready market for those units.