December 2019 Kontos Kommentary: Current Used Vehicle Market Conditions

Summary

2019 ended with average wholesale prices dropping for the seventh month in a row. Though some of this decline reflects seasonal patterns, it may also be indicative of used vehicle market “fatigue” after many months of admirably withstanding used vehicle supply growth without significant deterioration in values.

Details

According to KAR Global Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale prices in December averaged $10,822 — down 0.9% compared to November but up 1.9% relative to December 2018, as seen in the following table:

Average prices were down on a year-over-year basis for car segments in total, while they were up overall for the truck segments. Compact SUV/Crossover prices appear to be softening after several years of strong new vehicle sales and model proliferation.

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

Prices for midsize cars again outperformed SUVs/Crossovers in year-over-year growth.

Average wholesale prices for used vehicles remarketed by manufacturers were down 2.3% month-over-month but up 7.4% year-over-year. Prices for fleet/lease consignors were up 1.2% sequentially and up 4.6% annually. Average prices for dealer consignors were up 0.3% versus November and were flat relative to December 2018.

Based on NADA data, retail used vehicle sales by franchised and independent dealers were down 11.2% month-over-month and down 1.7% year-over-year in December. On a full-year basis, sales were up 1.6%. December CPO sales were down 0.7% from the prior month and up 5.3% year-over-year, according to figures from Autodata. On a full-year basis, CPO sales were up 4.1% versus 2018.

Introducing:  New KAR Global Electric Vehicle Price Indices1

KAR Global Analytical Services has been tracking electric vehicle wholesale prices for several years. With the growing interest in these vehicles, which currently represent only a small portion (less than one-half of one percent) of total auction sales, we have developed two price indices as shown below (based on NADA data):

For the time being, this analysis is limited to electric compact and luxury cars only, as these segments have the highest volume at auction. Over time, this analysis may be expanded to include other segments. We hope you will find this new information insightful.

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 Auction Services, Inc. The views and analysis are not the views of KAR Auction Services, 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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