The Manheim Used Vehicle Value Index in May dropped 0.1% to 119.1, bringing the indicator of wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) 4.8% lower than it was a year ago.
May’s decline was much slighter than the drop recorded in the prior four months. In recent months, auction volumes have steadily increased, a scenario that has resulted in lower used-car prices while new-car prices have remained relatively stable. As such, the index may continue to report smaller incremental declines through yearend. Future wholesale pricing, Manheim said on its website, might be dictated by retail volume and dealer profitability. Bolstered by easily accessible used-car financing at attractive terms, retail markets are expected to remain robust.
As we reported earlier this week, new-car sales continue to be stable, with new cars and light-duty trucks selling at a 15.3 million SAAR. After April’s sales generated a slight dip below the 15-million rate, last month’s bump was a welcome development. On a three-month moving average basis, the SAAR has been in a tight range since early 2012. “We find the three-month moving average more useful given that the monthly seasonal adjustment factor for new-vehicle sales is subject to errors due to shifting seasonal forces, the diminished relevance of selling day adjustments, and the lack of accounting for the distribution of weekends or holidays during the month,” Manheim Chief Economist Tom Webb stated.
