Manheim Reports Used Car Market Is Strong

Used Vehicle Prices in Q3 Up Nearly Three Percent from a Year Ago

ATLANTA -- Oct. 7, 2015: With wholesale used vehicle prices increasing in September for the fourth consecutive month, wholesale pricing remains one of strength and stability. This brought the Manheim Used Vehicle Value Index – a measure of wholesale prices adjusted for mix, mileage and season – to a reading of 124.8 in September, representing an increase of 2.8 percent from a year ago.

"Wholesale pricing trends have defied expectations from analysts at the beginning of the year, but used vehicle values are not defying market fundamentals," said Tom Webb, Chief Economist for Cox Automotive. "With pricing up nearly three percent from last September, consumers continue to see the increased value in purchasing used vehicles."

Despite a bad September employment report with earnings remaining flat and a decrease in the labor force participation rate, the economic outlook remains solid and the number of job openings is strong – adding to both lender and consumer confidence. Illustrating this, the weakest pricing tiers remained in the $9,000-$11,000 range while luxury cars and SUVs and CUVs showed modest gains.

Third quarter wholesale pricing for vehicle segments included:

Compact Car prices were down 5.4 percent in September compared to the same period last year and once again remain the only major market segment with lower pricing versus a year ago.

Midsize Cars remain one of the weaker segments, but saw an increase of 2.6 percent compared with the same time period last year.

Luxury Car values had a small gain of 0.5 percent over the same period last year, and remain weak considering this was also the case for last year's pricing. The small gain can also be attributed to more efficient re-marketing of cars in this class.

Pickups and Vans once again won the top spots, with pickup pricing up a significant 11.8 percent and vans up a more modest 5.1 percent on a year-over-year basis.

SUVs and CUVs rose 3.1 percent compared with last September, helped by an increase in vehicle miles of travel and lower gas prices.

"Used vehicle operations – including CPO sales – should be set up well for October given that new vehicle inventory levels are down thanks to a higher sales pace last month," said Webb. "Supporting the used vehicle industry's strength, low initial jobless claims in September and a high number of open positions per job seeker is giving workers the confidence to borrow and lenders the confidence to lend."

Visit Manheim's website to access to a variety of company publications, including recent Auto Industry Briefs, white papers and blog entries by Tom Webb.