April/May 2021 Kontos Kommentary: Current Used Vehicle Market Conditions

Summary

Average wholesale used vehicle prices cracked the $14,000-mark for the first time ever in April and then proceeded to set new highs above $15,000 in May. This is the latest sign of the seemingly never-ending rise in wholesale values resulting from a deluge in demand and a drought in supply.

Retail used vehicle and CPO sales did slow down a bit in April, but it is unclear if sales were limited by demand or supply and nevertheless remained high.

Details

According to KAR Global Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale prices in April averaged $14,436 — up 5.9% compared to March, up 50.0% relative to April 2020, and up 25.7% compared to pre-COVID/April 2019 as seen in the table below.

Interestingly, compact cars and fullsize SUVs/CUVs both had month-over-month increases of above nine percent, exemplifying the breadth of demand across all used vehicle segments, small and large.

When holding constant for sale type, model-year-age, mileage, and model class segment — using criteria that characterize off-lease units — prices in April were up significantly on a year-over-year basis versus April 2020 and April 2019 for both midsize cars and midsize SUV/CUVs, as seen in the following table:

The following graph shows trends in average prices by major vehicle type by week through May 16 using the same criteria:

*Compared to corresponding week in 2019 rather than 2020.

As the graph shows, average prices have been well above pre-COVID levels each week since the start of the year, regardless of vehicle type and generally at an increasing rate.

Based on NADA data, retail used vehicle sales by franchised and independent dealers in April were down 13.3% month-over-month and down 8.1% versus April 2019/pre-COVID sales. CPO sales were down 10.1% from the prior month but up 9.8% versus April 2019/pre-COVID levels, according to figures from Autodata. Additional retail sales trends are available via KAR Global’s Interactive Dashboards.

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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