Manheim: Used-Vehicle Sales Set to Hit Record High Before 2015
With 12% year-over-year growth in 1Q13, sales of used vehicles are on track to hit an all-time high before 2015, said Tom Webb, chief economist at Manheim, during the company’s quarterly conference call Friday. 
That growth, Webb said, was driven by several factors, including buyers having ample financing opportunities, more used cars in the marketplace, and a desire to “trade up for something a little bit better.”
Recent data from CNW Research found that the used-vehicle segment reported its best March sales in 11 years as it surpassed 3 million units, even with obstacles such as tax refund delays, payroll tax increases, and changing gas prices. In fact, used-car sales increased as other consumer expenses — such as dining out — slumped last quarter. “The used-vehicle market has been impervious to these factors in terms of retail sales activity,” Webb said.
The Manheim Used Vehicle Value Index, which Webb (pictured at right) also discussed, found that wholesale used vehicle prices (on a mixed-, mileage-, and seasonally adjusted basis) dropped in March for the third consecutive month. The Index reading fell to 120.4, a 4.6% year-over-year decline.
The supply of cars in the wholesale market was a hand-in-hand improvement with retail demand. “As such, we would view the recent moderation in wholesale pricing as more a natural realignment with respect to new vehicle prices than a supply-driven issue,” according to the Index’s website.
New-vehicle sales stayed flat at the seasonally adjusted annual rate of 15.3 million last month, but Manheim found that this leveling off didn’t increase incentives, which is usually the response automakers take when sales stay level.
Leases continue to grow amid lengthening loan terms and lower rates for customers with low credit scores, but financing has remained reeled in. “Given the strength of used vehicle residuals and the exceptional way loan portfolios have performed of late, it is likely the favorable lease and credit cycle has considerably longer to run,” the report stated.
