9th Monthly Increase in Used Vehicle Price Index
Wholesale used vehicle prices (on a mix, mileage and seasonally-adjusted basis) rose 1.8% in September. This brought the Manheim Used Vehicle Value Index to a record high of 118.5, representing a 6.9% increase from a year ago. Adjusted wholesale prices have now risen for nine consecutive months (see chart above).
The supply/demand dynamic that has pushed used vehicle values higher is a multiple-year, not a multiple-month, trend. Nevertheless, wholesale prices appear to be reaching a plateau. In particular, the last week of September saw an easing in prices that was greater than the normal seasonal pattern.
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 2.1 point September increase in the Manheim Used Vehicle Value Index marks the 9th 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%), August (5.1%) and September (6.95%, highest increases since Dec. 2005) for the index follow 17 consecutive months of consecutive year-to-year decreases (Nov. 2007 to April 2009). Further, the September 2009 reading of 118.5 represents an all-time record high for the index (back to 1995), and is now 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 20.5 point 9-month increase from December-September could reflect the momentum of an economic recovery.