Data Point
Wholesale Used-Vehicle Prices Continue Decline in First Half of September
Monday September 19, 2022
Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) declined 2.3% from August in the first 15 days of September. The Manheim Used Vehicle Value Index fell to 205.9, which was up only 0.6% from September 2021. The non-adjusted price change in the first half of September was a decline of 1.4% compared to August, moving the unadjusted average price down 1.5% year over year.
Over the last two weeks, Manheim Market Report (MMR) prices saw higher-than-normal and consistent declines resulting in a 1.2% cumulative decline in the Three-Year-Old MMR Index, which represents the largest model-year cohort at auction. Over the first 15 days of September, MMR Retention, which is the average difference in price relative to current MMR, averaged 98.4%, which indicates that valuation models are ahead of market prices. The average daily sales conversion rate of 49.4% in the first half of September declined relative to August’s daily average of 50.1%, but conversion rates typically decline in September. The latest trends in key indicators suggest wholesale used-vehicle values should see declines in the second half of the month.
Four of eight major market segments saw seasonally adjusted prices that were higher year over year in the first half of September. Compact cars had the largest increase at 7.0%, while vans and pickups outpaced the overall industry in seasonally adjusted year-over-year gains. Midsize cars matched the industry’s 0.6% gain. Compared to August, all major segments saw price declines, with full-size and sports cars down the most and pickups and compact cars down the least. The seasonal adjustment again amplified the declines, but all major segments saw unadjusted price declines in the first 15 days of September.
Retail and wholesale days’ supply back to normal in mid-September. Using estimates based on vAuto data as of Sept. 12, used retail days’ supply was 48 days, which was down one day from the end of August. Days’ supply was up seven days year over year but unchanged against the same week in 2019. Leveraging Manheim sales and inventory data, we estimate that wholesale supply ended August at 27 days, down four days from the end of July but up seven days year over year. As of Sept. 15, wholesale supply was at 26.5 days, down one day from the end of August but up seven days year over year and six days lower than 2019. Used supply measured in days’ supply is back to normal, suggesting that price trends should normalize for the time of year.
Rental risk prices seeing moderate year-over-year increase. The average price for rental risk units sold at auction in the first 15 days of September was up 2.0% year over year. Rental risk prices were down 1.5% compared to the full month of August. Average mileage for rental risk units in the first half of August (at 54,300 miles) was down 4.1% compared to a year ago and down 3.9% month over month.
Consumer Sentiment continues to improve in September. The initial August reading on Consumer Sentiment from the University of Michigan increased 1% to 59.5. The increase was primarily from improving future expectations. Expected inflation rates declined, which is a hopeful sign that at least consumer expectations for inflation have not become unanchored. Consumers’ views of buying conditions for vehicles were steady and near an all-time low. The daily index of consumer sentiment from Morning Consult increased 1.6% in the first 15 days of September. The index has improved as gas prices have been falling. The average price of unleaded nationally was $3.69 Thursday, Sept. 15, down 26% from the peak in June.
The complete suite of monthly MUVVI data for August 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, at 11 a.m. EDT.
If you have any questions regarding the Index or would like to sign up for updates, please contact the Cox Automotive Industry Insights team at Manheim.Data@coxautoinc.com.