8th Monthly Increase in Used Vehicle Price Index
Wholesale used vehicle prices rose for the eighth consecutive month in August (see chart above). The Manheim Used Vehicle Value Index for August was 116.4, an increase of 5.1% from a year ago.
The driving force pushing wholesale used vehicle values to ever-lofty levels has been primarily inventories - or, more precisely, the lack thereof. The reduced number of vehicles entering the wholesale market (as a result of declining dealer consignment and off-rental volumes) has been an ongoing story all year. More recently, new vehicle inventories have fallen to extremely low levels as a result of plant shutdowns and the increase in sales created by Cash-for-Clunkers.
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 1 point August increase in the Manheim Used Vehicle Value Index marks the 8th 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 May (1.5%), June (5.8%), July (5%) and August (5.1%) for the index follow 17 consecutive months of consecutive year-to-year decreases (Nov. 2007 to April 2009). Further, the August 2009 reading of 116.4 was the highest since March 2001, and higher than the pre-recession level.
Certainly, the Cash-for-Clunker factor might have created a temporary upward bias in the used vehicle index over the last couple months, but there was already a strong upward trend in place, and the 18.4 point 8-month increase from November-August could reflect the momentum of an economic recovery.