Wholesale used vehicle prices rose 2.6% in May, from April, leading the Manheim Used Vehicle Value index to 127.9, a record high and a 2.8% increase from the same month in 2016, according to Manheim. The automotive research consultant announced the May prices Wednesday (June 7).
“The May index result challenges concerns that increasing wholesale supplies from near peak off-lease volumes and rising rental volumes would lead to rapidly declining used car values,” according to Manheim. “Indeed, the opposite appears to be happening. Higher commercial volumes at auction are providing the used vehicle market with quality and choice that offers a compelling value to consumers.”
Sales growth has been outpacing inventory, helping to push the index to a record high. A younger mix of vehicles also pushed up the index.
Meanwhile, new car sales continue to struggle. “Franchised dealers have had more than 4 million new units in stock for the last four months,” according to Manheim. Sales volume declined 0.5% in May, from the same month in 2016. Since January, new vehicle sales have fallen 2% compared to the same period in 2016.
“Combined rental, commercial and government purchases of new vehicles were down 15%, due primarily to a sharp decline of new sales into rental (down 24%),” according to Manheim. “Retail sales were up 3% in May, helping push retail sales into slightly positive territory for the year (0.1%).
Sales of certified pre-owned vehicles rose 7% in May, and were up 1.6% since January. Light truck sales increased 16% as SUVs and pickups come off lease. Passenger cars accounted for 49% of sales in May.
The average price for rental risk vehicles sold at auction fell 2% in May from the same month in 2016. The price was down 1% from April.
“Consumer confidence remains near a 16-year high,” according to the May data from the Conference Board. “Consumers remain positive about the economy due to strong labor conditions that are resulting in earnings’ rising faster than inflation. Likewise, stock indices and home prices continue to support growth in household wealth. The unemployment rate in May fell to 4.3%, a 16-year low.”