Generous manufacturer incentives helped new-car sales, but didn’t hurt used-car values.
Manheim Consulting calls that a “seeming anomaly.” Among cited reasons for used-car values holding their own:
- Earlier increases in average new-vehicle transaction prices.
- Manageable new-vehicle inventories. Consequently, dealers did not push new-vehicle sales at the expense of used.
- A low supply of late model used vehicles in the wholesale market.
Used-car prices dropped segment-wide, beginning in early 2009, but have shown plenty of signs of improvement lately, says Paul Taylor, chief economist for the National Automobile Dealers Assn.
Wholesale used-vehicle prices rose sharply in March. The Manheim Used-Vehicle Value Index stood at a record 119.9, a 13% increase compared with March-2009.
That continuing rise is despite several auto makers pouring on new-vehicle incentives in the form of low-interest-rate financing and lease deals. Even AmericanMotor Co. Inc., normally reluctant to offer incentives, got involved.
Manheim says pricing strength in the wholesale used-vehicle market became more broad based in first-quarter 2010 as record tax refunds and improved retail-credit availability reinvigorated the market for lower-priced vehicles.
Meanwhile, prices for late-model, higher-priced units remained strong.
“It was another great week of auction activity with the prices continuing to climb on even more vehicles,” Ricky Beggs, managing editor at the Black Book used-car value guide, says of the week of April 5.
“We are now on a 7-week roll where over 60% of the vehicles that were adjusted have seen raises in values,” he says.
The total for all car segments increased for the fourth straight week, rising an average of $5, he says. The car segment with the greatest improvement was entry-level midsize, going up by $39, followed closely by fullsize at plus $33.
The various truck segments were up for the eighth straight week. Only midsize CUVs and luxury SUVs finished lower than before.
The overall average adjustment for the week was just over $71, compared with $48 for the previous week, Beggs says.
The RVI used-vehicle market update indicates the largest wholesale value increases on the car side are sports cars, fullsize sedans and luxury midsize sedans.
Strong in the truck market are midsize and small SUVs, while small pickups show signs of weakness, RVI says.
The continued strength of used-market values “emphasizes the focus and importance within the retail market for used vehicles,” Beggs says.
He adds: “As long as the consumer interest for used-vehicles continues – coupled with a less-than-adequate supply of used vehicles in the wholesale channels to meet this interest – the value level of good used vehicles will continue to hold steady or climb even more.”