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November 2018 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Average wholesale prices in November softened on a year-over-year basis in part from comparison to last year’s inflated prices from Hurricanes Harvey and Irma. Still, prices were down on a month-over-month basis in November at a greater-than-seasonal level, indicating weaker market conditions. Off-lease units remain a major bright spot, as these vehicles are scarcer at physical auctions, despite growth in lease terminations, because more of these units are being purchased upstream.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in November averaged $10,599 – down 4.2% compared to October and down 1.8% relative to November 2017. As a group, the truck segments held up somewhat better than the car segments, but virtually all model classes showed declines.

When holding constant for sale type, model-year age, mileage, and model class segment -- using criteria that characterize off-lease units -- prices were up significantly on a year-over-year basis for both midsize cars and midsize SUV/CUVs, as seen in the following table:

 

 

Average wholesale prices for used vehicles remarketed by manufacturers were down 3.0% month-over-month and down 2.8% year-over-year. Prices for fleet/lease consignors were down 3.8% sequentially but up 4.6% annually. Average prices for dealer consignors were down 3.7% versus October and down 1.9% relative to November 2017.

Based on NADA data, retail used vehicle sales by franchised dealers were up 2.2% year-over-year in November, but were down 0.9% for independent dealers. November CPO sales were down 3.3% from the prior month but up 1.8% year-over-year, according to figures from Autodata. On a year-to-date basis, CPO sales remain up 2.2% versus last year.

 

1 The analysis is based on over six million annual sales transactions from over 150 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. ADESA Analytical Services segregates these transactions to study trends by vehicle model class.

The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to KAR Auction Services, Inc. The views and analysis are not the views of KAR Auction Services, its management or its subsidiaries; and their accuracy is not warranted. The statements contained in this report and statements that the company may make orally in connection with this report that are not historical facts are forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “bode”, “promises”, “likely to” and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the company’s Securities and Exchange Commission filings. The company does not undertake any obligation to update any forward-looking statements.

Wholesale Price Data by Model Class Segment - November 2018
Wholesale Price Data by Model Class Segment History 2015-112018
Wholesale Price Data by Model Class Segment - Full History 2011 - 012016
ADESA Analytical Services Selected Model Class Segments
Wholesale Price Data by Model Class Segment - Full History 2000 - June 2012

Kontos Kommentary - November 2018