2021 Year-End Kontos Kommentary: Current Used Vehicle Market Conditions

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Summary

Average wholesale prices softened modestly through year-end after reaching new highs in early November.  Nevertheless, prices remained dramatically higher than year-ago and pre-pandemic levels, as demand continues to outstrip supply.

Retail used vehicle sales and CPO sales also softened at year-end, but were solid on a full-year basis and may have been stronger if used vehicle supply was more plentiful.

Details

According to KAR Global Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale prices in November averaged $16,163 — down 0.9% compared to October, up 32.9% relative to November 2020, and up 48.0% versus pre-COVID/November 2019, as seen in the table below. 

Wholesale prices in December averaged $16,026 — down 0.8% compared to November, up 34.8% relative to December 2020, and up 48.1% versus pre-COVID/December 2019, as seen in the following table:

The year-end price moderation generally affected all model classes equally but left prices for all segments well above year-ago and pre-pandemic levels.

The same can be said when holding constant for sale type, model-year-age, mileage, and model class segment — using criteria that characterize off-lease units — for midsize cars than for midsize SUV/CUVs, as seen in the following table:

The following graph shows trends in average prices by major vehicle type and in total by week during 2021 through January 2, 2022, using the same criteria:

Overall average prices ended 2021 more than 45% above pre-COVID averages for this select group of vehicles, despite some general softening in the last few weeks of the year.

Based on NADA data, retail used vehicle sales by franchised and independent dealers in November (latest available) were down 7.9% month-over-month but up 11.4% year-over-year.  Year-to-date through November, sales were up 9.7% versus 2020 and up 1.9% compared to 2019/pre-pandemic levels.

CPO sales fell 16.5% month-over-month in November and recovered only modestly (up 2.5% m/m) in December, according to figures from Autodata.  CPO sales on a year-to-date basis through December, were up 5.1% compared to 2020 but down 2.5% versus 2019.

Source: Analysis is based on over seven million annual sales transactions from over 250 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. KAR Global Analytical Services segregates these transactions to study trends by vehicle model class, sale type, model year, etc.

Disclaimer: The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to KAR Global. The views and analysis are not the views of KAR Global, its management or its subsidiaries; and their accuracy is not warranted.

Forward-Looking Statements: The statements contained in this report and statements that the company may make orally in connection with this report that are not historical facts (including, but not limited to, expectations, estimates, assumptions and projections regarding the industry and business) may be forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “promises”, “likely to” and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the company’s Securities and Exchange Commission filings. The company does not undertake any obligation to update any forward-looking statements.

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