October 2019 Kontos Kommentary: Current Used Vehicle Market Conditions

Summary

Average wholesale prices in October were flat relative to September but remained modestly up on a year-over-year basis. Car prices fell on a monthly and annual basis, while truck-segment prices faired more favorably. Off-lease units showed signs of price softness. On the other hand, October CPO sales were strong, which is supportive of off-lease demand.

October 2019 Kontos Kommentary from KAR Communications on Vimeo.

Details

According to KAR Global Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale prices in October averaged $11,141 – down 0.1% compared to September but up 0.7% relative to October 2018, as seen in the following table:

Year-over-year declines in average prices occurred in all of the car segments, while minivans and compact SUVs/crossovers were the only truck segments to experience annual declines.

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


This is the first time since January 2018 that both these bellwether segments have shown year-over-year declines simultaneously and may be indicative of further price softening for off-lease vehicles.

Average wholesale prices for used vehicles remarketed by manufacturers were down 0.5% month-over-month but up 2.5% year-over-year. Prices for fleet/lease consignors were down 0.6% sequentially but up 2.4% annually. Average prices for dealer consignors were down 3.5% versus September and down 2.8% relative to October 2018.

October CPO sales were up 12.4% from the prior month and up 7.9% year-over-year, according to figures from Autodata. On a year-to-date basis, CPO sales are up 2.9% versus last year.

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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