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August 2018 Kontos Kommentary

Current Used Vehicle Market Conditions and Outlook


Summary

Retail demand and upstream remarketing were key contributors to wholesale used vehicle price growth in August, as prices were up on a month-over-month and year-over-year basis.


Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in August averaged $11,049 – up 1.4% compared to July and up 0.9% relative to August 2017. Car prices in total went up 2.2% month-over-month, while truck prices rose 1.0%, indicating that car segments are now in better supply-demand balance.

When holding constant for sale type, model-year age, mileage, and model class segment, prices were up significantly on a year-over-year basis for both midsize cars and midsize SUV/CUVs, as seen in the following table:

 

Midsize car prices continue to outperform prices for midsize SUVs and crossovers, as the incoming supply of trucks outpaces that of cars. The strength of prices for both groups in this analysis indicates that upstream sales are preventing an oversupply of off-lease units from reaching physical auction lots.

Average wholesale prices for used vehicles remarketed by manufacturers were up 3.2% month-over-month and up 2.0% year-over-year. Prices for fleet/lease consignors were up 1.5% sequentially and up 8.2% annually. Average prices for dealer consignors were up 1.9% versus July and up 0.6% relative to August 2017.

Based on NADA data, retail used vehicle sales by franchised dealers were up 4.5% year-over-year in August, and were up 9.8% for independent dealers. August CPO sales were up 4.9% from the prior month and up 1.8% year-over-year, according to figures from Autodata. On a year-to-date basis, CPO sales are up 2.5% versus last year.

 

1 The analysis is based on over six million annual sales transactions from over 150 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. ADESA Analytical Services segregates these transactions to study trends by vehicle model class.

The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to KAR Auction Services, Inc. The views and analysis are not the views of KAR Auction Services, its management or its subsidiaries; and their accuracy is not warranted. The statements contained in this report and statements that the company may make orally in connection with this report that are not historical facts are forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “bode”, “promises”, “likely to” and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the company’s Securities and Exchange Commission filings. The company does not undertake any obligation to update any forward-looking statements.

Wholesale Price Data by Model Class Segment - August 2018
Wholesale Price Data by Model Class Segment History 2015-082018
Wholesale Price Data by Model Class Segment - Full History 2011 - 012016
ADESA Analytical Services Selected Model Class Segments
Wholesale Price Data by Model Class Segment - Full History 2000 - June 2012

Kontos Kommentary - August 2018