Wholesale Vehicle Prices Rebound in December
Wednesday January 8, 2020
- Manheim’s wholesale used vehicle price index increased to 141.1 in December, up 1.54% month over month and 2.5% from December 2018.
- Retail used-vehicle sales increased by 2.6% in 2019 vs 2018.
- Affordability issues continue to hamper new-vehicle sales, benefit used-vehicle market.
ATLANTA (Jan. 8, 2020) – Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 1.54% month over month in December. This brought the Manheim Used Vehicle Value Index to 141.1, a 2.5% increase from a year ago.
Following a normalizing trend in weekly Manheim Market Report (MMR) prices at the end of November, December saw stability and even gains in many segments. Three-year-old vehicle values in aggregate were up 0.1% for the month. As a result of the stabilization at year-end, prices in aggregate ended 2019 at a historically more normal level of 90% relative to the value at the beginning of the year but well below the performance experienced in either of the last two years.
On a year-over-year basis, luxury, SUV/CUVs and midsize cars saw seasonally adjusted wholesale price increases in December. Midsize cars outperformed the overall market last month; all other major segments underperformed. Pickups, compact cars and vans finished below year-ago levels.
“Used vehicle values ended the year with an increase, as the pace of retail used sales grew both month over month and year over year,” said Jonathan Smoke, chief economist, Cox Automotive. “The strong December pace contributed to a 2.6% increase for used retail sales in 2019 helping offset the weakness in new retail sales. Payment affordability challenges in new grew demand for used. New retail sales declined by 4% in 2019, but total new light vehicle sales still came in above 17 million—but just barely—according to our Kelley Blue Book team. The key reason the new market managed to hit 17 million was another year of increased fleet sales.”
U.S. Vehicle Sales
According to Cox Automotive estimates, total used vehicle sales volume was flat year over year in December. We estimate the December used seasonally adjusted annual rate (SAAR) to be 40.0 million, on par with 40.0 million last December and up from November’s 39.7 million rate. The December used retail SAAR estimate is 20.1 million, up from 19.6 million last year and up month over month from November’s 19.3 million rate.
December total new-vehicle sales were down 6.3% year over year, with one less selling day compared to December 2018. The December SAAR came in at 16.7 million, a decline from last year’s 17.4 million and down from November’s 17.1 million rate. New light vehicle sales in 2019 decreased 1.6% versus the prior year to 17.04 million vehicles, according to Kelley Blue Book, keeping the industry’s streak of 17 million annual new vehicle sales alive for a fifth straight year.
Fleet was a core driver of strength in the new vehicle market for 2019, but fleet purchases slowed by year-end. Combined rental, commercial, and government purchases of new vehicles were down 0.7% year over year in December. Retail sales of new vehicles were down 7.1% in December, leading to a retail SAAR of 14.3 million, down from 15.0 million last December and down from November’s 14.8 million rate. Fleet sales were up 2.9% in 2019 and retail sales were down 2.3%, as the overall new vehicle market finished the year down 1.6%.
New-vehicle inventories came in under 4 million units for the eighth consecutive month.
Rental Risk Pricing
The average price for rental risk units sold at auction in December was up 3.5% year over year. Rental risk prices were up 1.5% compared to November. Average mileage for rental risk units in December (at 51,400 miles) was up 6% compared to a year ago and up 5% month over month.
The consumer confidence index disappointed in December as the index declined 0.2% when analysts had expected an increase. Consumer confidence ended the year down slightly from last year. The underlying measures of the future and present situation again diverged, as the index for the present situation increased from a five-month low in November; but the future situation index fell. Housing has been a contributor to economic growth in 2019, and the trends at year-end suggest continued strength. New home sales, which are new contracts on newly constructed homes, increased 1.3% in November and are up 17% year over year. Pending home sales, which are new contracts signed on existing homes, increased 1.2% in November and are up 5.6% year over year.
Download additional commentary on the Manheim Used Vehicle Value Index powered by Cox Automotive.
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’s34,000-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