Used Vehicle Index Rises for 3rd Straight Month

MANHEIM CONSULTING -- In March, wholesale used vehicle prices increased 0.6% from the previous month. The Manheim Used Vehicle Value Index now stands at 106.1, which represents a year-over-year decline of 1.5%. With March representing the third consecutive monthly increase, seasonally adjusted wholesale values have risen 8.3% in 2009 (see charts above).

The strength in auction pricing has been the result of the reduced supply that is normally generated by trade-ins on new vehicle sales, the substitution effect from new to used vehicle purchases, a strong tax refund season, and some easing in the availability of retail financing. The supply reduction caused by the unprecedented steepness at which new vehicle sales have fallen will have long-term effects as well as the immediate impacts being noticed today.

From last month's report:

Some analysts have suggested that the rapid rise in wholesale used vehicle pricing is a precursor to an improvement in new vehicle sales and may even point to a recovery in the overall economy. It’s more likely, however, that the turnaround in wholesale used vehicle values is a necessary, but not a sufficient, condition for a better new vehicle market. That’s especially true given that the recent rise in auction pricing has been driven in large part by supply dynamics that were created by the unprecedented slowdown in new vehicle sales.