June 2019 Kontos Kommentary: Current Used Vehicle Market Conditions

Summary

The 2019 spring/tax season used vehicle market came to an end appropriately in June, as average wholesale prices fell on a month-over-month basis, although they were up year-over-year.  Solid retail used vehicle sales again provided demand-side support for wholesale values.

Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in June averaged $11,478 — down 1.6% compared to May but up 5.4% relative to June 2018.  Car and SUV/Crossover prices were hardest hit; van and pickup truck prices held up better.

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

Fleet/Lease Sales of Three-MY-Old Units w/ 36K-45K Miles
Average PricesY/Y Variance
Model ClassJun 2019Jun 2018$%
Midsize Car$12,600$11921$6795.7%
Midsize SUV/CUV$21,094$20,564$5292.6%

Average wholesale prices for used vehicles remarketed by manufacturers were up 4.6% month-over-month and up 6.8% year-over-year.  Prices for fleet/lease consignors were down 2.0% sequentially and up 4.3% annually.  Average prices for dealer consignors were up 1.6% versus May and up 7.3% relative to June 2018.

Based on NADA data, retail used vehicle sales by franchised dealers were up 1.5% year-over-year in June and were up 0.6% for independent dealers, though sales were down by over two percent from prior-month for both groups.  June CPO sales were down 4.4% from the prior month and down 0.2% year-over-year, according to figures from Autodata.  On a year-to-date basis, CPO sales are up 1.2% versus last year.1The 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. ADESA Analytical Services segregates these transactions to study trends by vehicle model class, sale type, model year, etc.

The 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 Analytical Services segregates these transactions to study trends by vehicle model class, sale type, model year, etc.

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. The statements contained in this report and statements that the company may make orally in connection with this report that are not historical facts are forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “bode”, “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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