The used-vehicle market is one of the few bright spots for the automotive industry this year as wholesale prices increased for the fifth consecutive month, says a report from Manheim Consulting.
Dealers continue to pay higher-than-expected prices at the auctions mainly because they have been able to maintain the retail-gross profits on used vehicles, Manheim says.
Declining new-vehicle sales also have pushed wholesale prices higher as dealers rely on auctions rather than trade-ins to fill their used-vehicle inventories.
Increasing consumer confidence and improving retail finance availability also have helped drive up used-vehicle prices, Manheim says.
Retail used-vehicle sales jumped 6.8% in April and 7.9% in May. Much of that increase came in the lower to mid-priced segments.
Certified pre-owned sales dropped 8% through the first five months of this year. Certified sales have been hampered by a declining supply of vehicles and many captive finance firms’ inability to offer attractive incentives due to the continuing credit crisis.
Fleet sales continue to decline, with car-rental sales plunging 38% through May, on top of the 21% drop in 2008. Manheim predicts rental sales will hit 1.1 million units by the end of the year, down from 2.1 million sales in 2006 and 2007.
Commercial-fleet sales also are down, dropping 57% so far this year.