September 2019 Kontos Kommentary: Current Used Vehicle Market Conditions

Summary

Average wholesale prices in September fell relative to August but remained up on a year-over-year basis.  The year-over-year price growth was again due to the strength and growing share of truck-segment sales, as car prices fell on a monthly and annual basis.  Total retail used vehicle sales and CPO sales were down significantly in September, though they remain up year-to-date.

Details

According to KAR Global Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale prices in September averaged $11,155 – down 0.8% compared to August but up 1.6% relative to September 2018 as seen in the following table:

Declines on both a month-over-month and year-over-year basis were concentrated in the car segments.

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

Average wholesale prices for used vehicles remarketed by manufacturers were down 3.5% month-over-month but up 3.6% year-over-year.  Prices for fleet/lease consignors were down 1.6% sequentially but up 0.9% annually.  Average prices for dealer consignors were down 2.4% versus August and down 1.9% relative to September 2018.

Based on NADA data, retail used vehicle sales by franchised and independent dealers were down 8.6% month-over-month and down 1.6% year-over-year in September.  September CPO sales were down 21.4% from the prior month and down 4.1% year-over-year, according to figures from Autodata.  On a year-to-date basis, CPO sales are up 2.4% 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, 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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