Wholesale Used Vehicle Prices Decline in First Half of November



All major market segments saw seasonally adjusted prices that were again lower year over year in the first half of November. Pickups, SUVs, and vans lost less than the industry’s year-over-year decline of 5.3%, at 4.2%, 4.8%, and 5%, respectively.

Graphic: Cox Automotive


Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) decreased 1.6% from October in the first 15 days of November, according to the midmonth Manheim Used Vehicle Value Index released Nov. 17.

The index declined to 206.1, which was down 5.3% from the full month of November 2022. The seasonal adjustment reduced the decrease. The non-adjusted price change in the first half of November dropped 2.3% compared to October, while the unadjusted price was down 6.9% year over year.

Over the last two weeks, Manheim Market Report (MMR) prices declined an aggregate of 1.9%, which was more than the normal decline of 1% for the time of year. During the first 15 days of November, MMR Retention, the average difference in price relative to current MMR, averaged 98.8%, indicating that valuation models are ahead of market prices. The average daily sales conversion rate of 52.8% in the first half of November was above the November 2019 daily average of 50.8%. The conversion rate indicates that the first 15 days of the month saw slightly stronger-than-normal buying demand for this time of year.

All major market segments saw seasonally adjusted prices that were again lower year over year in the first half of November. Pickups, SUVs, and vans lost less than the industry’s year-over-year decline of 5.3%, at 4.2%, 4.8%, and 5.0%, respectively. Compact cars continued to slide, down 10.7%, midsize cars were off by 8%, and luxury lost 6.1% year over year. Most major segments saw negative price performance compared to October, with luxury the only gainer, up 0.3% in a down month. Pickups lost 2.8%, midsize cars were down 2.1%, and SUVs were equal to the industry, with a 1.6% decline. Compact cars and vans, down 1.3% and 0.7%, lost less than the industry in month-over-month declines.

Wholesale Supply Unchanged in Mid-November

Leveraging Manheim sales and inventory data, Cox estimates that wholesale supply ended October at 27 days, up one day from the end of September and flat year over year. As of Nov. 15, wholesale supply was unchanged from the end of October at 27 days, down one day year over year and down three days compared to 2019. Wholesale supply is tighter than normal for this time of year.

CPO Sales Come in Surprisingly Weak in October

In October, certified pre-owned (CPO) sales experienced a slight decline, falling by less than 400 units from October 2022 to reach 207,189, a year-over-year decrease of 0.2%. However, this decrease is more pronounced compared to September, as month-over-month CPO sales were down by over 23,000 units, or 10.1%. One less selling day contributed to both year-over-year and month-over-month declines.

“CPO sales came in surprisingly weak in October, down 10% from September,” said Chris Frey, senior manager of Economic and Industry Insights at Cox Automotive, in a news release. “Consumers may have chosen new over nearly new in October. With growing inventory levels, we saw healthy new-vehicle sales in October.”

Year-to-date CPO sales have exceeded 2.2 million units, up nearly 8%, or over 161,365 units compared to the same period last year. Luxury CPO sales have increased an impressive 11%, while non-luxury CPO sales are up 7%.

“Despite the month-over-month decline in October, year-to-date CPO sales remain on track to hit our 2.7 million full-year forecast,” noted Frey.

When considering brands, Asian brand CPO sales are up more than 12% year to date, while European brands are up less than 6%. Meanwhile, the Detroit Three continue to lag, with only a 2% increase.

CPO is outperforming the used-vehicle market year to date. For comparison, total used-vehicle sales in October decreased 0.4% from September to 3 million units, according to Cox Automotive estimates based on vehicle registration data. Estimates based on registration data indicate that the used-vehicle sales pace — both total and retail — in October declined compared to the market’s pace of one year ago. The seasonally adjusted annual rate, or SAAR, is estimated to have finished at 36.5 million, down from last October’s 37.8 million pace but up from September’s upwardly revised 35.8 million level.

Rental Risk Prices and Mileage Declined in First Two Weeks of November

The average price for rental risk units sold at auction in the first 15 days of November was down 6.3% year over year. Rental risk prices were down by 4.7% compared to the full month of October. Average mileage for rental risk units in the first half of November (at 47,200 miles) was down 12.7% compared to a year ago and down 6.7% month over month.

Measures of Consumer Sentiment Mixed to Start November

  • The initial November reading on Consumer Sentiment from the University of Michigan declined 5.3% to 60.4, as views of both current conditions and future expectations declined. Worries about inflation are again driving much of the decline as the median expected inflation rate over the next year increased to 4.4% from 4.2% last month, and the longer-term view increased to 3.2% from 3%. That five-year view of inflation was the highest since 2008 and is worrisome as it suggests consumers are anchoring to a persistent level of higher inflation. Consumers’ views of vehicle-buying conditions declined to the worst level so far this year.
  • The daily index of consumer sentiment from Morning Consult tells a slightly different story, including the daily readings from this week. As of Nov. 16, that index has increased 0.7% in November. The improvement in the daily gauge of consumer sentiment aligns with average gas prices’ declining 3.5% so far this month to the lowest levels since early January.

 

Originally posted on Vehicle Remarketing



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