6th Monthly Increase in Used Vehicle Price Index; June Jump Is Largest Monthly Increase On Record
MANHEIM CONSULTING -- Wholesale used vehicle prices moved significantly higher in June. With a reading of 114.1, the Manheim Used Vehicle Value Index is now 5.8% above its year ago level. The adjusted increase in used vehicle values since the beginning of 2009 has been 16.4% (see chart above, click to enlarge, recessions are shaded).
From a previous Manheim Consulting 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.
MP: The 5-point June increase in the Manheim used vehicle value index was the largest single monthly increase in the history of the index back to 1995, and marked the sixth consecutive monthly increase (every month this year), following decreases in 10 out of the previous 14 months (from October 2007 to December 2008).
The year-to-year increases in both May and June follow 17 consecutive months of consecutive year-to-year decreases (Nov. 2007 to April 2009).
7 Comments:
Cash for Clunkers
Fewer trade-ins from fewer new car purchases.
My dad is a used car dealer, so I'm a little familiar with this industry.
The low to mid range used car market is hot right now. High end used cars aren't doing so well.
The reason wholesale prices for used cars jumped is because DEMAND FOR USED CARS jumped.
This means people want (actually *need*) CHEAPER cars, not NEW cars.
Trying to extrapolate a future demand for new cars from a jump in wholesale used cars is ludicrous.
Dave: I think the point is that, as used cars increase in prices, it begins to make more sense for people to buy new thereby aiding the economy.
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Mr. Miller,
Of course there's a significant reduction in potential supply available to the auction industry. It's the logical byproduct of significantly fewer new cars being purchased in recent years.
I've been saying for months now that new car sales are way too low. At one point during the current downturn, the vehicle replacement rate was running in the neighborhood of 27 years!
New car sales are poised to start ramping up in a big way very soon because facts are stubborn things:
1. About 13-14 million cars go to the junkyard each year,
2. Less than 10 million are being purchased annually,
3. The driving age population continues to grow, and
4. As used car prices continue to increase, more and more people will opt to buy new for the full warranties, newest and latest technologies/safety features, free oil changes/roadside assistance, etc.
In fact, a turnaround in new car sales may have already begun. From Scott Grannis' 7/2/09 piece "Auto Sales Have Bottomed" over at Calafia Beach Pundit:
"Auto sales most likely hit bottom last February, when they came in at a 9.1 million annual (seasonally adjusted) rate. In June they were 9.7, and they averaged 9.6 in the January-June period. How fast they increase is now the question, but there is a lot of pent-up demand out there, given the degree to which sales have plunged in the past two years."
Has anyone noticed that NEW car prices have increased in the past 2 months? Today I researched a Nissan Versa.....June 09' they were 12K.......today I see 16K. What is going on with that?
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