Page 36 - GIADA-Feb-2018-Final

DEALER TIPS

Volume gains ahead for late-model

vehicles; how have prices trended?

By Joe Overby and Nick Zulovich, Auto Remarketing

The volume of late-model vehicles in the
auction lanes slowed down slightly during
the last full month of fall, but the latest
year-to-date data and forecasts for coming
years indicate big spikes in supply.

According to the Guidelines report from
J.D. Power Valuation Services, there was a
0.8-percent month-over-month decline in
late-model auction volume in November.
Year-over-year, it was down 2 percent. 3 varying assessments of wholesale car saw month-over-month average price
However, J.D. Power’s report indicates price changes declines, although full-size SUV/CUVs had a
that late model volume was up 4.4 percent As 2017 wound down, J.D. Power Valuation noteworthy uptick despite higher gas prices.
year-to-date through November. Services, KAR Auction Services and RVI
Group all shared their wholesale price “Average wholesale prices in November
And there could be more upward analysis regarding what happened in were down month-over-month more
movement on the way, given the off November. The report that showed the significantly than in October and, despite
-lease trends that RVI Group shared in greatest change came from J.D. Power being up modestly on a year-over-year basis,
its latest quarterly analysis. The firm said Valuation Services, which indicated in are indicative of an end to the price boost
22.9 percent of new-vehicle sales in the Guidelines that wholesale prices of used from Hurricanes Harvey and Irma,” Kontos
third quarter were leases, with historically vehicles up to 8 years in age fell by 4.2 said in his Kontos Kommentary.
strong lease penetration rates expected to percent in November.
stick around through 2019. “Retail used-vehicle demand was soft for
“November’s loss was more than anticipated,” the month as well, although CPO sales were
RVI’s lease supply index was up 13.8 analysts said in the report. “However, we solid,” he added. “Lingering truck demand in
percent year-over-year in November. expected some compensation towards the Texas in the aftermath of Harvey may have
end of the year for the lift in demand and again contributed to the strength of midsize
“As a result of the strong leasing rates over strengthening in prices associated with SUV/CUV prices in November.”
the past two years, we expect off -lease Hurricanes Harvey and Irma.”
supply to continue growing through 2020,” The team at RVI Group determined real
the firm said its report. After three consecutive months of increases, used-vehicle prices (seasonally adjusted,
the J.D. Power Valuation Services’ Seasonally 2- to 5-year-old vehicles) declined slightly
On a segment level, RVI points out the Adjusted Used Vehicle Price Index declined on a year-over-year basis in November.
3-year rise in leases for small SUVs is in November, softening by 1.6 points or According to the RVI Used Car Price Index,
likely to impact prices in those segments 1.4 percent to settle at 113.0. Through real used vehicle prices (after adjusting for
when those leases end. November, the index is down 5.9 percent MSRP) fell by 0.1 percent in November when
compared to the same period in 2016. compared to November of the previous year.
“As the increasing off-lease supply of small
SUVs enters the market, we expect real used Meanwhile, according to ADESA Analytical Month-over-month real used-vehicle prices
vehicle prices for the small SUV segment Services’ monthly analysis of wholesale also declined by 0.1 percent. On a month-
to decline by 9.7 percent below current prices by vehicle model class, values in over-month basis, about half of the segments
levels by 2020,” RVI analysts explained. November averaged $10,797. That figure saw small gains in used-car prices.
While down from second-quarter levels represented a 1.6-percent drop compared
(27.6 percent), lease penetration in the to October, but a 1.2-percent lift relative to “Prices for used vehicles are stronger than
segment was still a strong 26.5 percent in November 2016. expected due to higher demand for both
the third quarter, according to RVI. new and used vehicles after the hurricane
KAR Auction Services chief economist Tom season damaged approximately 1 million
Kontos pointed out that almost all segments cars,” RVI Group said. n

34 | GIADA Independent Auto Dealer FEBRUARY 2018