ATLANTA and CARMEL, IN – Average auction prices in March, according to ADESA Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, were up 3.8 percent from year-ago levels. Average prices were up 3.0 percent compared to February.

For the ninth consecutive month, compact cars had the strongest year-over-year price gains (12.8 percent), and full-size SUVs had y-o-y price declines (-4.1 percent). This may be an indication that consumers are seeking more fuel-efficient vehicles and abandoning large SUVs. This thesis is now being supported by several other trackers of consumer purchasing trends (e.g., J.D. Power-PIN and Kelley Blue Book), and by new vehicle sales declines and high inventory levels of full-size SUVs.

The ADESA Auction Inventory Index continues to be well below 100. As of April 1, the index stood at 78.3 – down from 147.3 at the end of December and down 13.9 percent from its year-ago level of 90.9. ADESA Analytical Services estimates this represents approximately 21 days of auction sales. The relatively low inventory levels help set the stage for continued strong pricing in April if retail demand continues to be vibrant. On the other hand, there may be an influx of off-rental units in coming months as the spring break season ends around the country.

The ADESA Auction Dealer Optimism Index registered another significant gain (2.2 percentage points) in March. The March 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 – another factor indicating strength in demand driven by the retail market.

At Manheim, wholesale used vehicle prices (on a mix, mileage, and seasonally adjusted basis) increased for the seventh consecutive month in March. The Manheim Used Vehicle Value Index rose to a level of 112.2, up from 110.3 in February. Wholesale prices over the past year have risen 5.3 percent and have increased 9.6 percent from the April 2003 cyclical trough. The monthly gain in wholesale prices for March was 3.5 percent before the seasonal adjustment and 1.5 percent after statistically accounting for the normal seasonal improvement that occurs between February and March.

With money to spend, and lenders to borrow from, customers continued to be attracted to the deals that remained plentiful on dealership used car lots in March. This stronger retail market, which created faster inventory turns and better grosses, offset the negative impact on dealer bidding that one would normally expect as a result of surging energy prices and higher new vehicle inventories.