ATLANTA: Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) decreased 0.59% month over month in December, putting the Manheim Used Vehicle Value Index to 161.1, a 14.2% gain from a year ago.

Manheim Market Report (MMR) prices declined each week over the four full weeks of December, resulting in a 2.2% cumulative wholesale price decline on the Three-Year-Old Index. In the last full week of December, the Three-Year-Old Index declined 0.6%, a larger than average decline for the final week of the year. MMR retention, which is the average difference in price relative to current MMR, averaged 99.4% in December. The sales conversion rate averaged 51% over the month, a decline from November and relatively low for this time of year.

On a year-over-year basis, most major market segments saw seasonally adjusted wholesale price increases in December. Luxury cars and pickup trucks outperformed the overall market, while most other major segments underperformed the overall market.

It is clear that there has been a material step change in used vehicle values whether you look at it from a pure price trend or we gauge used values against new, said Cox Automotive Chief Economist Jonathan Smoke. It will be important going forward to assess if at any point this might imply a correction could happen when the imbalance is no longer so heavily weighted towards demand. As we expected, what we have been seeing so far shows no evidence of a correction or one on the horizon. Supply remains tight, and demand remains strong despite some softening this fall. While January is a bit of a wild card for the economy, as we get closer to the spring, conditions look to be very favorable for used vehicle values.

U.S. Vehicle Sales
According to Cox Automotive estimates, the total used-vehicle sales volume in December was down 5% year over year. The December used-vehicle SAAR is estimated at 38.0 million, down from 40 million last December but up from November's 37 million rate. The December used-retail SAAR estimate is 20.2 million, down from 20.8 million last year but from November's 19.6 million rate.

Cox Automotive is estimating total used-vehicle sales in 2020 at 36.7 million, down 8% from the 40 million in 2019. Retail used-vehicle sales in 2020 are estimated to be 19.5 million, down from 20.8 million in 2019.

New-vehicle sales in 2020, at 14.5 million, dropped nearly 15% from year-ago levels. Fleet sales were down 36% in 2020, while retail sales were down 10%. Sales momentum, however, picked up in the final days of December. Sales in the final month were up 6.4% year over year, with three more selling days compared to December 2019. The December SAAR came in at 16.3 million, a decrease from last year's 16.8 million but up from November's 15.6 million rate.

Inventory Levels Returning to Normal
Using a rolling seven-day estimate of used retail days' supply based on vAuto data, supply peaked at 115 days on April 8. Normal used retail supply is about 44 days' supply. It ended December at 49 days, slightly above normal levels. Wholesale supply peaked at 149 days on April 9, when normal supply is 23. December ended with 47 days' supply, as the wholesale sales pace slowed.

New-vehicle inventories dipped slightly in December and came in around 2.7 million units, which was down 22% from December 2019.

Rental Risk Pricing
The average price for rental risk units sold at auction in December was up 6.4% year over year. Rental risk prices were up 1% compared to November. Average mileage for rental risk units in December, at 52,000 miles, was up 1% compared to a year ago and down 4% month over month.

Despite December Drop, Manheim Used Vehicle Value Index Ends 2020 Near Record High

Liked This Article? Be The First To Share it!

Class

Send