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July 2018 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

After four months of year-over-year declines, average wholesale used vehicle prices registered a slight increase in July. However, this was primarily due, once again, to a shift in sales mix towards the truck model classes and the continued influx of younger off-lease vehicles, both of which have been tending to drive up average prices. Still, the summer market for used vehicles appears to be solid, both at the wholesale and retail levels.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in July averaged $10,902 – up 0.1% compared to June and up 0.1% relative to July 2017. However, more car and truck segments showed month-over-month declines than gains, with a slight uptick in the mix of trucks accounting for the small overall average gain. The truck model classes now make up 53% of the total units sold at auction, with the 50% threshold having been reached about a year ago. (Additional note, the steep month-over-month decline in minivan prices was primarily due to mix and mileage.).

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

 

Once again, midsize car prices outperformed prices for midsize SUVs and crossovers, as the incoming supply of trucks continues to outpace that of cars. The strength of prices for both groups in this analysis indicates that upstream sales are preventing an oversupply of off-lease units from reaching physical auction lots.

Average wholesale prices for used vehicles remarketed by manufacturers were up 3.3% month-over-month and up 3.4% year-over-year. Prices for fleet/lease consignors were up 0.4% sequentially and up 8.1% annually. Average prices for dealer consignors were up 2.0% versus June but down 2.3% relative to July 2017.

July CPO sales were down 7.5% from the prior month and down 1.9% year-over-year on fewer selling days, according to figures from Autodata. On a year-to-date basis, CPO sales are up 2.8% 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 - July 2018
Wholesale Price Data by Model Class Segment History 2015-072018
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 - July 2018