Current Monthly Index

Manheim Index Declines in July

Between June and July, wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) fell 1.3%. July’s Manheim Used Vehicle Value Index was 125.9, which still represented a 5.9% increase from its year-ago level.

The recent decline in wholesale prices is a natural retrenchment from the record high reached in May, which is when new vehicle inventory shortages were at their worst. The fundamental drivers of used vehicle values - lower wholesale supplies and improving retail demand - have not changed. Indeed, retail used vehicle sales picked up sharply in July.

New vehicle sales improve, but more is needed.  . We earlier contended that anything above 12 million for July’s seasonally adjusted annual rate (SAAR) should be considered a bonus. Thus, we had a bonus with the sales at a 12.2 million SAAR. The feat is all that more impressive given the economic conditions and uncertainty that gripped both consumers and businesses. But, by the same token, that economic backdrop suggests that the return to a 13 million SAAR may be pushed further out.

Retail used vehicle sales stay strong in a weak economy. July’s used vehicle retail sales were a "blockbuster" according to CNW Marketing Research, which reported a year-over-year sales increase of 13.5%. TrueCar.com, however, reported on July 28 that they expected used vehicle sales would be up only 2.3% during the month. (But, then, TrueCar also estimated that the new vehicle SAAR would be only 11.4 million.) In any event, both firms said that used vehicle sales topped the four million mark in July. As with the new vehicle sales rate in July, it should be remembered that the month had five weekends this year, which normally boosts the sales tally. Nevertheless, given the exceptional weakness in overall consumer spending in the second quarter (a trend that continued into July), the ability of dealers to grow used unit volumes has been noteworthy.

Off-rental: prices high, volumes low. The average price of a rental risk unit sold at auction remained above the $14,000 mark for the fifth consecutive month in July. Average mileage moved down during the month, but it remained above the year-ago level. The volume sold during the month declined, but at a slower rate than in the first half of the year.

End-of-service commercial fleet units: lower prices, lower volumes. . After reaching a record high in June, prices for end-of-service midsize fleet cars (mileage and seasonally adjusted) moved lower in July. A review of monthly pricing and volumes sold in 2011 suggests that fleet managers were spot-on in remarketing their largest volumes when prices were the highest.

Small car pricing remains strong. . Compact and midsize cars are the only two segments with meaningful gains over the past year, but it is pick-up trucks that have shown the best performance over the past two months. Although compact and subcompact vehicles continue to have tight supplies in the new vehicle market, that situation is expected to change in the months ahead. And, as such, there should be some moderation in pricing.