Prices on wholesale used vehicles rose 1% last month on a mix-, mileage- and seasonally adjusted basis, as the Manheim Used Vehicle Value Index closed the month at 121.9.
September and October customarily see a cyclical swing in wholesale pricing, and the current Manheim Index shows that there was a decent model-year transition for manufacturers and dealers. There were slim leftover stocks, which resulted in a lack of deep discounting. New-car inventory levels have been below 60 days on a 12-month rolling basis for the longest period ever, as of Nov. 1.
Hurricane Sandy, which battered the East Coast in the final days of the month, reduced October’s sales to a 14.2 million SAAR for new cars and light-duty trucks. By comparison, September sales hit a 14.9-million-unit pace. September, though, was a five-weekend month, while dealers in Sandy’s path only had three weekends for sales in October.
New-vehicle sales are expected to perk up this month, thanks to people in regions affected by Sandy needing to replace vehicles and some promotional offers put in place to make up October’s missed sales, though Manheim doesn’t think used-car prices will be disturbed.
Despite used sales being trimmed by the hurricane last month, dealers still saw a 17% gain. CPO sales are on track for a new record of 1.8 million units this year, which should also benefit from the pull-ahead lease programs that are expected to surface over the next few months. Looking further, Manheim reported that dealerships are getting ready for the down-payment deferral promotions during next year’s tax season.
While Manheim agrees with the bevy of analysts who expect a rise in wholesale prices as a result of Hurricane Sandy, the auction company expects a short-term and small effect.
Just as they have throughout the year, middle-priced cars in the $8,000 to $11,000 range continue to be strong, though the past few months there was a flattening of relative market strength among the different price tiers.
