May 2019 Kontos Kommentary: Current Used Vehicle Market Conditions

Summary

It would appear that the 2019 spring/tax season market started later but lasted longer than other years, as average wholesale prices were up on both a month-over-month and year-over-year basis in May.  Retail used vehicle sales, including CPO sales, 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 May averaged $11,667 – up 1.5% compared to April and up 5.0% relative to May 2018.  Compact and midsize cars were two notable segments that experienced overall average price declines for the month.

However, 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 ClassMay-19May-18$%
Midsize Car$12,612$11,943$6695.6%
Midsize SUV/CUV$21,013$20,858$1560.7%

Average wholesale prices for used vehicles remarketed by manufacturers were down 1.2% month-over-month and down 0.7% year-over-year.  Prices for fleet/lease consignors were up 2.0% sequentially and up 5.5% annually.  Average prices for dealer consignors were up 1.7% versus April and up 4.3% relative to May 2018.

Based on NADA data, retail used vehicle sales by franchised dealers were up 1.4% year-over-year in May, but were down 1.0% for independent dealers.  May CPO sales were up 7.8% from the prior month and up 1.1% year-over-year, according to figures from Autodata.  On a year-to-date basis, CPO sales are up 1.5% versus last year.

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. ADESA 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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