January 2020 Kontos Kommentary: Current Used Vehicle Market Conditions

Summary

The new year started with a bang, as wholesale used vehicle prices were up on both a month-over-month and year-over-year basis in January. Just as in previous months, however, overall prices for the car segments were softer than for the truck segments.

The reverse was again true for mid-size cars versus mid-size SUVs/Crossovers in the off-lease market segment, as the former may be in short supply due to dealers preferentially obtaining mid-size cars upstream and leaving fewer of these units available for buyers at physical auction.

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According to KAR Global Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale prices in January averaged $11,096 – up 2.5% compared to December 2019 and up 3.1% relative to January 2019, as seen in the following table:

Average prices were again down on a year-over-year basis for car segments in total, while they were up overall for the truck segments.

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 both midsize cars and midsize SUV/CUVs, as seen in the following table:

Prices for midsize cars continue to outperform SUVs/Crossovers in year-over-year growth within this market segment.

Average wholesale prices for used vehicles remarketed by manufacturers were down 3.0% month-over-month but up 7.1% year-over-year. Prices for fleet/lease consignors were up 3.2% sequentially and up 5.9% annually. Average prices for dealer consignors were up 1.8% versus December and were up 3.5% relative to January 2019.

January CPO sales were down 8.5% from the prior month but up 8.2% year-over-year, according to figures from Autodata.

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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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.

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