Manheim Used Vehicle Index At Record High
From today's report from Manheim Consulting:
"Wholesale used vehicle prices rose again in May. The Manheim Used Vehicle Value Index for May was a record 121.0, which represented a 10.9% increase from a year ago (see chart above). May's strength was driven, in large part, by vehicles in the lower and middle price tiers, but prices for late-model vehicles also remained strong as they were helped by low levels of new vehicle inventory."
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 Manheim Used Vehicle Index has now risen for six straight months, has risen every month since January 2009 except for one (October 2009). From close to an all-time low of 98 in December 2008, the index is now at the highest-ever level in the history of the gauge of wholesale used vehicle prices going back to 1995. It's one more V-shaped indicator of an economic rebound.
12 Comments:
how much of this was cash for clunkers?
that took a fair bit of the low end out of the market.
Bad news for poor people.
Good news for auto parts recyclers. The ONLY winners from cash for clunkers.
This is probably as it should be. For years, the Big 3 were over producing cars because they had fixed payroll in the job banks which made the marginal cost to produce a vehicle pretty low. But they obviously weren't making money on those cars, they were just comparing the job bank cost with being able to cover some of that cost.
Now that they're not flooding the market with excess cars, there's a better balance. Even the rental car companies started using cars longer a couple years ago. It used to be rare to see more than a few thousand miles on the odometer, then some started showing up with over 10,000. Which is entirely reasonable.
As long as the politicians stay out of it, things should get to a reasonable level. It wouldn't hurt if people kept their cars and extra year or so on average.
dr perry-
this index doesn't look all that correlated to GDP to me.
have you run an r squared?
what makes you suspect that it's a good recovery proxy?
"Even the rental car companies started using cars longer a couple years ago. It used to be rare to see more than a few thousand miles on the odometer, then some started showing up with over 10,000. Which is entirely reasonable."
Hydra, if this is correct, it's an interesting trend. Can you substantiate this in some way?
"Now that they're [auto manufacturers] not flooding the market with excess cars, there's a better balance."
I think you're on to something there. I'd like to blame cash-for-clunkers for thinning the market, but your explanation makes more sense.
Only slightly off topic...
http://online.wsj.com/article/SB10001424052748704113504575264513748386610.html
Arthur Laffer:
Tax Hikes and the 2011 Economic Collapse
"Today's corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market."
"Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be."
"Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession."
What if used car lots are giving greater incentives to their sales force then the increasingly soft sell approach of new car dealers? Who wins the competition for the sale? Maybe the guy or gal with the best compensation. It could also be the "near newness" of a lot of inventory because of recent distressed ownership changes. Just some thoughts and not a debate.
Ron H, it wasn't Hydra that wrote that. Does it really sound like a Hydra post? Notice the last part about politicians staying out of it.
Anyway, I have gold status with 2 of the 3 rental majors, so they generally get me low mileage cars. But starting a couple years ago, I started seeing cars into the low teens in mileage and looking a bit more worn. So it's anecdotal. However, here are a few articles discussing it.
http://travel.nytimes.com/2009/02/24/business/24rental.html
http://www.usatoday.com/travel/news/2008-12-22-rental-car-economy-changes_N.htm
http://consumerist.com/2009/02/damn-not-even-rental-car-companies-are-buying-cars.html
It just occurred to me that the rental companies are a big source of used cars, so if they reduced fleets and held cars longer, that reduced both demand for new cars and the supply of used cars.
Gee fazoli, why all the childish whining?
Did professor Mark step on one of your cherished delusions?
Anon @ 2:00
Sorry, you're correct. The "politicians" part should have spoiled it as a Hydra post. If you comment frequently here, picking a name instead of "Anonymous" will help eliminate confusion.
Thanks for the links. Interesting stuff.
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