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Used-Vehicle Wholesale Prices Continue Retreat From Record Highs


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Article Highlights

  1. Normal depreciation sets in following unexpected summer and fall appreciation.
  2. All major vehicle segments saw price gains in December.
  3. Decreasing supply and strong demand indicate at least an average year ahead.

ATLANTA (Jan. 8, 2019) – Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) decreased 1.03 percent month-over-month in December. This brought the Manheim Used Vehicle Value Index to 137.6, a 4.3 percent increase from a year ago, and down from its record high of 140.9 in October.

The Manheim Used Vehicle Value Index (MUVVI) is updated monthly using data from Manheim, North America’s largest wholesale used-vehicle marketplace and most extensive auction network. By applying statistical analysis to its database of more than 5 million used-vehicle transactions annually in the U.S., Manheim, a Cox Automotive company, has developed a reliable measurement of used-vehicle prices that is independent of underlying shifts in the characteristics of vehicles being sold.

Looking at trends in weekly Manheim Market Report (MMR) prices, December saw continued and more normal levels of depreciation. Three-year-old vehicles ended the month worth 2 percent more than they normally would have if typical depreciation occurred instead of the abnormal appreciation observed this summer.

On a year-over-year basis, all major market segments saw price gains in December; but more affordable vehicles continued to see the greatest increase in values. Compact cars and midsize cars outperformed the overall market, while utility vehicles and pickups underperformed the overall market.

“Declining wholesale volumes will be driven by decelerating growth in off-lease maturities, and stable, if not down, dealer volume due to strong retail demand,” said Jonathan Smoke, chief economist for Cox Automotive, the parent company of Manheim. “Decreasing supply, as well as strong demand, indicate at least an average year ahead for used-vehicle prices in 2019.”

U.S. Vehicle Sales
According to Cox Automotive estimates, used-vehicle sales volume was up 0.3 percent year-over-year in December. It is estimated that the December used-vehicle seasonally adjusted annual rate (SAAR) will be 40.0 million units, up slightly from 39.9 million last December. Used-vehicle sales volume increased 1 percent in 2018 leading to a full-year sales total of 39.6 million vehicles.

December new-vehicle sales were up 1.5 percent year-over-year, with the same number of selling days compared to December 2017. The December SAAR came in at 17.5 million, up versus last year’s 17.3 million. Cars continue to see sharp declines, as sales in December fell 10 percent compared to last year. Light trucks outperformed cars in December and were up 6 percent year-over-year. New-vehicle sales in 2018 increased 0.5 percent versus the prior year to 17.2 million vehicles, the fourth consecutive year of sales exceeding 17 million units.

Fleet has been the driver of the strength in the new-vehicle market for 2018. Combined rental, commercial and government purchases of new vehicles were up 6.6 percent year-over-year in December, and up 9 percent on a month-over-month basis. Rental (+12 percent) and government (+7 percent) fleet channels were up year-over-year in December. Fleet sales finished 2018 up 7 percent versus 2017. The strongest-gaining fleet channel was commercial, which increased 8.8 percent in 2018 versus the prior year. New-vehicle retail sales were up 1 percent in December leading to a retail SAAR of 15.11 million units, up slightly from 15.08 last December. Retail sales finished 2018 down 1 percent versus 2017.

Rental Risk Pricing
The average price for rental risk units sold at auction in December was up 4 percent year-over-year. Rental risk prices were down 1 percent compared to November. Average mileage for rental risk units in December (at 48,400 miles) was down 3 percent compared to a year ago and up 3 percent month-over-month.

Economic Trends
The pace of real economic growth in the third quarter as measured by GDP was revised down in the third and final estimate to 3.4 percent. The Fed raised rates by a quarter-point as expected, but surprised the financial markets by revising expectations from three rate increases in 2019 to two. Consumer confidence, as measured by the Conference Board, fell 8.3 points in December to 128.1, an indicator that consumers’ view of the economy is starting to decline as worries about interest rates and a volatile stock market begin to grow.

To download additional commentary on Cox Automotive’s MUVVI, visit the Cox Automotive Newsroom.

About Manheim
Manheim® is North America’s leading provider of vehicle remarketing services, connecting buyers and sellers to the largest wholesale used-vehicle marketplace and most extensive auction network. Through 127 traditional and mobile auction sites and diverse digital channels, the company helps dealer and commercial clients achieve business results by providing innovative end-to-end inventory solutions. Approximately 18,000 employees enable Manheim to register about 8 million used vehicles per year, facilitate transactions representing nearly $57 billion in value, and generate annual revenues of $3 billion. Headquartered in Atlanta, Manheim North America is a Cox Automotive™ brand. For more information, visit http://press.manheim.com.

About Cox Automotive
Cox Automotive Inc. makes buying, selling, owning, and using cars easier for everyone. The global company’s 34,000-plus team members and family of brands, including Autotrader®, Clutch Technologies, Dealer.com®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital®, VinSolutions®, vAuto®, and Xtime®, are passionate about helping millions of car shoppers, 40,000 auto dealer clients across five continents, and many others throughout the automotive industry thrive for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately owned, Atlanta-based company with revenues exceeding $20 billion. www.coxautoinc.com

Media Contact:
Mark Schirmer

Dara Hailes

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