Wholesale Used-Vehicle Prices See Large Increase in First Half of February
Friday February 17, 2023
Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 4.1% from January in the first 15 days of February. This was the largest February increase since 2009’s full-month 4.4% gain. The mid-month Manheim Used Vehicle Value Index rose to 234.0, which was down 7.3% from the full month of February 2022. The seasonal adjustment drove a small part of the gains. The non-adjusted price change in the first half of February was an increase of 3.4% compared to January, while the unadjusted price was down 5.9% year over year.
Over the last two weeks, Manheim Market Report (MMR) prices increased by an aggregate of 1.3%. Historically, prices are stable during the first two weeks of February, as the average price change for these weeks in the six years from 2014 through 2019 was a decline of 0.1%. Over the first 15 days of February, MMR Retention, which is the average difference in price relative to current MMR, averaged 100.3%, which indicates that valuation models are below market prices. The average daily sales conversion rate of 64.3% in the first half of February increased relative to January’s daily average of 58.9% and was well above the February 2019 daily average of 55.3%.
All eight major market segments saw seasonally adjusted prices that were again lower year over year in the first half of February. Pickups had the lowest decline, falling by 4.2%, with compact cars, vans, midsize, and sports cars losing less compared to the overall industry in seasonally adjusted year-over-year changes. Luxury cars and SUVs declined by 10.4% and 8.9%, respectively. All eight major segments saw price increases compared to January, with gains ranging from 3.3% to 5.4%.
Retail and Wholesale Days’ Supply Below Normal in Mid-February
Using estimates based on vAuto data as of February 13, used retail days’ supply was 44 days, which was down three days from the end of January. Days’ supply was down 15 days year over year and down 14 days compared with the same week in 2019. Leveraging Manheim sales and inventory data, we estimate that wholesale supply ended January at 26 days, down six days from the end of December and down five days year over year. As of Feb. 15, wholesale supply was at 23 days, down three days from the end of January, down nine days year over year, and nine days lower than in 2019. Used supply measured in days’ supply and compared to 2019 suggests supply is below normal for this time of year, which indicates that price pressure to the upside is likely to continue.
Rental Risk Prices and Mileage Mixed in First Two Weeks of February
The average price for rental risk units sold at auction in the first 15 days of February was down 0.8% year over year. Rental risk prices were up 3.7% compared to the full month of January. Average mileage for rental risk units in the first half of February (at 59,000 miles) was up 0.1% compared to a year ago and up 6.3% month over month.
Consumer Sentiment Measures Up to Start February
The initial February reading on Consumer Sentiment from the University of Michigan increased by 2.3% to 66.4, as views of current conditions improved but future expectations declined. Median expected inflation rates increased one year out but were unchanged over the next five years. Consumers’ views of buying conditions for vehicles declined slightly from what had been the best level since August 2021. The improvement in the Michigan index is slightly stronger than the increase observed for the month so far in the daily index of consumer sentiment from Morning Consult. That index was up 1.2% for the month through Feb. 15. Sentiment has improved in February, with gas prices declining again. According to AAA, the average price for unleaded gasoline fell 2.2% in the month as of Feb. 15, and the average price per gallon at $3.42 was down 3% year over year.
The complete suite of monthly MUVVI data for February will be released on March 7, 2023, the fifth business day of the month, as regularly scheduled. The next quarterly call will be held on Friday, April 7, 2023, at 11 a.m. EDT. Register to attend.
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Note: The Manheim Used Vehicle Value Index was adjusted to improve accuracy and consistency across the data set as of the January 2023 data release. The starting point for the MUVVI was adjusted from January 1995 to January 1997. The index was then recalculated with January 1997 = 100, whereas prior reports had 1995 as the baseline of 100. All monthly and yearly percent changes since January 2015 are identical. Learn more about the decision to rebase the index.