Used Vehicle Prices Hit Record

The third quarter is one of the record books due to a particularly active hurricane season, with wholesale used vehicle prices rising 2.77 percent in September. The Manheim Used Vehicle Value Index – a measure of wholesale prices adjusted for mix, mileage and season – reached a reading of 134.9, which was a record for the fifth consecutive month and a 6.3 percent increase over the same period of 2016.

“While growing retail demand is strong, most of the price momentum can be attributed directly to recovery after hurricanes Harvey and Irma,” said Jonathan Smoke, chief economist at Cox Automotive, Manheim’s parent company . “Both the demand for replacement and the reduction in available supply are causing widespread wholesale inventories to tighten, and we expect this to result in wholesale price gains for at least another month or two.”

According to Cox Automotive estimates, used car sales improved 8 percent year-over-year last month and its September SAAR increased to 40.4 million units from 38.1 million units in August. Retail growth in used sales comes from vehicles less than 4 years old, which have grown 5 percent in 2017 so far compared to the same period last year. Vehicles less than 4 years old represent the largest age segment of vehicles in the used car market.

An active hurricane season also helped boost new car sales, and demand for replacement led to new September sales volume rising 6 percent year-on-year. With a seasonally adjusted annual rate (SAAR) of 18.5, this was the highest reading in September in three decades and the highest monthly level of SAAR since July 2005.

As for the trends in the prices of used vehicles, all car segments rose compared to last year, with especially strong increases once again in vans and vans. Key third-quarter wholesale pricing trends for all vehicle segments include:

Compact car prices – typically one of the weakest segments – experienced some relative strength compared to the mid-size car class and rose 4.4 percent, much higher than the previous quarters.
Medium-size cars – as in the last quarter – were the weakest segment, but still had a modest increase of 2.3%.
Pick-ups and vans – Continuing along with their price strength, pick-ups had the most significant increase of all vehicle classes, up 9.1 percent over last September, while vans were close at hand of 8.9 percent.
SUVs and CUVs increased by a strong 6 percent since last September and again remained somewhat weaker than the general market.
The values ​​of luxury cars – such as pickups and vans – surpassed the general market, reaching 6.4 percent over the same period last year thanks in part to ongoing efforts for further re-marketing efficient use of cars in this class.

As for the seven unique vehicles according to the Manheim Market Report (MMR), only two of them – both luxury vehicles – depreciated in September. The rest – all medium and compact – gained value last month with the Ford Fusion also showing a slight annual gain. For a complete list of top performing vehicles and their performance related MMR statistics, click here.

For the price of rental risk, the average price of these units sold at auction in September rose 4 percent year on year and 2 percent compared to August. The average mileage of the rental risk units in September of 42,200 miles was 6 percent above a year ago.

“Hurricanes Harvey and Irma are also affecting the overall economy, disrupting the momentum that drives the third quarter. We now have eyes on the tropical storm Nate – which is expected to hit the Gulf Coast like a hurricane,” he said. Smoke. “While the economy remains strong with the final reading on GDP growth in the second quarter of 3.1 percent – the strongest quarter in more than two years – economic data will be more difficult to judge any sustained change in the trend for the coming months.

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