Will spring bounce in used-vehicle prices last?

Used-vehicle prices took an extraordinary route in 2018, bouncing higher in spring as usual but then staying uncharacteristically hot through summer.

And 2019 is looking atypical, too. After a later spring bounce in used values, the industry again is experiencing unusually high summer prices, according to the Manheim Used Vehicle Value Index. In June, wholesale used-vehicle prices were up 0.61 percent over the previous month.

"We've had two very abnormal years for weekly used-vehicle prices as extraordinary events, coupled with growing supply, have caused periods of price increases as well as declines," Cox Automotive Chief Economist Jonathan Smoke said in a conference call to discuss June performance. "Even before this year started, we expected we would be riding a roller coaster."

The index's tracking of bellwether, 3-year-old vehicles showed eight straight weeks of price drops to start the year, for a decline in values of 2.3 percent. "That's typically a stable time, but not this year," Smoke said.

Sinking consumer confidence, a polar vortex weather event and the government shutdown were likely culprits toward the beginning of the year, he said. Nervousness about the status of tax refunds also seemed to cause dealers to avoid stocking up on inventory. And last summer's price increases left room for declines early this year.

Prices at the end of the first six months of 2019 rose at a slower rate than they did during the same period of 2018.

"This June and last June both saw uncharacteristic gains," Smoke said. Last year, rising prices continued into July and August and resulted in records on the index in the fall.

"The key question now is, how will the summer unfold?" Smoke said. "Will demand soften in a typical seasonal pattern and heading into the fall? Or like last year, will we see urgency to buy driving faster-moving inventory and higher wholesale prices?"

Proposed tariffs on some foreign vehicles and general trade uncertainty could play a role, he said.

Meanwhile, Manheim forecasts 2019 used-vehicle sales of 39.2 million, down from 39.4 million last year. Sales are expected to drop again in 2020, to an estimated 39 million.

But Manheim said it expects the volume of used vehicles retailed by dealers to continue to grow as supply shifts to higher-quality, younger and more expensive cars and trucks. Manheim forecasts used-vehicle retail sales of 19.8 million this year, up from 19.5 million last year. It estimates used-vehicle retail sales of 20 million next year.