Wholesale Used Vehicle Market Prices Fall Below Benchmark Level



The major market segments all experienced seasonally adjusted prices that were down year over year in May.


Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) declined in May compared to April, according to the Manheim Used Vehicle Value Index (MUVVI) released June 7, which fell to 197.3 (12.1%) from a year ago.

The seasonal adjustment to the index reduced the impact on the month, resulting in values that declined 0.6% month over month. The non-adjusted price in May decreased by 1.2% compared to April, moving the unadjusted average price down 11.4% year over year.

In May, daily MMR Retention, which is the average difference in price relative to the current MMR, averaged 98.8%, meaning market prices stayed below MMR values. Against April 2024, valuation models moved up half a point on MMR retention. The average daily sales conversion rate dropped to 56.4%, showing that demand declined relative to April, which is seasonally normal for this time of year and includes the Memorial Day holiday week. For comparison, the daily sales conversion rate averaged 55.2% in May over the last two years.

“While declines in used-vehicle values overall were a bit muted in the first half of May, they picked up in the latter half of the month,” said Jeremy Robb, senior director of economic and industry insights at Cox Automotive, in a news release. “It’s seasonally normal to get some weakening in the market over the Memorial Day weekend. But this month, we experienced a little more softening in the final week. As we move into summer, used retail days’ supply remains lower than last year, which could bring in more buyers at Manheim in the coming weeks.”

In May, Manheim Market Report (MMR) values saw weekly decreases that were slightly above long-term average declines, although the first half of the month was better while the back half was weaker. During the last four weeks, the Three-Year-Old Index decreased an aggregate of 2%, including a decline of 0.7% in the last week of the month, which was the week of the Memorial Day holiday. Those same five weeks delivered an average decrease of 1.5% between 2014 and 2019, illustrating that depreciation trends are tracking higher than long-term averages for the year.

YOY Declines By Vehicle Category

The major vehicle market segments all experienced seasonally adjusted prices that were down year over year in May.

  • Compared to May 2023, pickups and luxury were the only segments that outperformed the industry, down 11.2% and 11.4%, respectively.
  • SUVs declined by 13.2% year over year
  • Midsize cars were down 16.3%
  • Compact cars were the worst-performing segment, falling by 17.4% against last year.

Compared to the previous month, pickups show the best results, rising by 0.3% against April.  Performing worse than the industry, SUVs fell by 1%, luxury was down 1.3%, midsize cars declined 1.9%, and compact cars fell the most against April, declining by 2.2% for the month.

It’s also important to look at the market by powertrain, which can be done with additional data. Seasonally adjusted EV values for May 2024 were down 16%, while non-EVs were down 11.6% year over year. Regarding values against last month, seasonally adjusted EV values continued to decline more than the market overall, falling by 2.4% from April 2024, while non-EVs declined 1% over the same period.

Retail Used-Vehicle Sales Increased in May

Assessing retail vehicle sales based on observed changes in units tracked by vAuto, Cox initially estimates that retail used-vehicle sales in May were up 6% compared to April and higher year over year by 12%. The average retail listing price for a used vehicle was unchanged over the last four weeks.   

Using estimates of retail used days’ supply based on vAuto data, an initial assessment indicates May ended at 45 days’ supply, down three days from 48 days at the end of April and down four days from May 2023 at 49 days.

New-vehicle sales in May were up 4.8% from last year, and volume was up 8.5% from April. The May sales pace, or seasonally adjusted annual rate (SAAR), came in at 15.9 million, up 0.4 million from last year’s pace and up just slightly from April’s 15.8 million level.

Combined sales into large rental, commercial, and government fleets increased 5.7% year over year in May. Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining new retail sales were estimated to be up 6.5% from last year, leading to an estimated retail SAAR of 13 million, up 0.4 million from last year’s pace, and up from April’s 12.5 million level. Fleet share was estimated to be 17.3%, down from last year’s 18.6% share.

Rental Risk Prices and Mileage Showed Declines in May

The average price for rental risk units sold at auction in May declined 14.1% year over year. Rental risk prices decreased by 1.2% compared to April. Average mileage for rental risk units in May (at 56,500 miles) continues to be down compared to a year ago, and the year-over-year trends have slowed. For May, rental unit average mileage was down 3.5% from May 2023. Mileage for units in May was down 4% compared to April.

All Measures of Consumer Confidence Were Mixed in May

  • The Conference Board Consumer Confidence Index increased 4.6% in May, as views of both the present situation and the future improved; but views of the future improved substantially and more than erased April’s decline in that index. Consumer confidence was down 0.5% year over year. Plans to purchase a vehicle in the next six months was unchanged compared to April and May last year.
  • According to the sentiment index from the University of Michigan, consumer sentiment declined 10.5% in May against April but was up 17.1% year over year. The median consumer expectation for inflation in a year increased to 3.3%, its highest level since November; but the expectation for five years was steady at 3%. The consumer’s view of buying conditions for vehicles declined to the lowest level since November as the view of interest rates deteriorated.
  • The daily index of consumer sentiment from Morning Consult was again volatile in May and declined by 2.1% for the month, leaving the index up by 6.9% year over year.
  • Gas prices also fell in May, which may boost consumer sentiment in the coming weeks. The national average price for unleaded gas from AAA decreased 3.2% from the end of April to $3.54 per gallon, which was unchanged from the prior year.

 

 

 





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