Wholesale Used-Vehicle Prices Decline Substantially in August

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) decreased 4.0% in August from July. The Manheim Used Vehicle Value Index declined to 210.8 but is up 8.4% from a year ago. The non-adjusted price change in August was a decline of 2.6% compared to July, leaving the unadjusted average price up 5.9% year over year.

In August, Manheim Market Report (MMR) values saw larger-than-normal declines that were consistent over the month. Over the last four weeks, the Three-Year-Old Index decreased a net 2.5%. Over the month of August, daily MMR Retention, which is the average difference in price relative to current MMR, averaged 98.3%, meaning market prices were below MMR values. The average daily sales conversion rate increased to 50.5%, which was below normal for the time of year. For example, the sales conversion rate averaged 56.4% in August 2019. The lower conversion rate indicated that the month saw buyers with more bargaining power for the time of year.

All major market segments saw seasonally adjusted prices that were higher year over year in August, except for full-size cars. Compact cars had the largest increase at 15.9%, followed by vans and midsize cars, which all had seasonally adjusted year-over-year gains ahead of the overall industry. Compared to July, all eight major segments’ performance was down. Sports cars lost nearly 5%, while compact and midsize cars declined 3.5% and 3.0%, respectively. SUVs were down 4.3%, and vans were down 2.9%.

Used retail sales increased in August. Leveraging a same-store set of dealerships selected to represent the country from Dealertrack, we estimate that used retail sales increased 11% in August from July and that used retail sales were down 9% year over year. Compared to August 2019, sales were down 19%, which was an improvement from July, when sales were down 29%, based on the same-store results.

Using estimates of used retail days’ supply based on vAuto data, August ended at 47 days of supply, down from 53 days at the end of July but higher than how August ended in 2021 at 38 days. Leveraging Manheim sales and inventory data, wholesale supply is estimated to have ended August at 27 days, higher than how August 2021 ended at 21 days but lower than how July ended at 31 days.

August’s total new-light-vehicle sales were up 3.2% year over year, with one more selling day than August 2021. By volume, August new-vehicle sales were essentially unchanged from July. The August SAAR came in at 13.2 million, a 0.7% increase from last year’s 13.1 million but down 1.1% from July’s 13.3 million pace.

Combined sales into large rental, commercial, and government fleets were up nearly 15% year over year in August. Sales into rental were down 18% year over year, while sales into commercial fleets were up 37% and sales into government fleets were up 28%. Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 3.7%, leading to an estimated retail SAAR of 11.5 million, down 0.2 million from last month’s pace, or 1.3%, but up 0.1 million from last year, or 1%. The fleet share of 12.4% held steady in August from July but was down from last August’s 12.8%.

Rental risk mileage declined in August, holding stable from last year. The average price for rental risk units sold at auction in August was up 15.7% year over year. Rental risk prices were down 0.8% compared to July. Average mileage for rental risk units in August (at 56,500 miles) was down 19.4% compared to a year ago and down 3.9% from July.

Measures of consumer confidence improved in August. The Conference Board Consumer Confidence Index® increased 8.3% in August when a smaller increase had been expected, but the July index was also slightly revised down. Both underlying measures of present situation and expectations saw strong gains. Plans to purchase a vehicle in the next six months increased slightly but remained down year over year. The Consumer Sentiment Index from the University of Michigan also saw strong gains in August. The Michigan index rose 13% as gains extended from a record low in June. Similarly, the Morning Consult Index of Consumer Sentiment saw accelerating gains in August. That index increased 4.6% in August after rising 3.3% in July. The declining average price for gasoline has lifted consumer attitudes even though stock market volatility returned in August. The average price for unleaded gasoline nationally was $3.83 at the end of August, representing a nearly 24% decline from its peak of $5.02 in June.

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The complete suite of monthly MUVVI data for September will be released on Oct. 7, 2022, the fifth business day of the month as regularly scheduled. Register to attend the next quarterly call on Friday, Oct. 7, 2022.

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