Wholesale Used-Vehicle Prices Increase in First Half of May

Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 0.3% from April in the first 15 days of May, according to the mid-month Manheim Used Vehicle Value Index released May 17. The index rose to 199.1, down 11.3% from May 2023.

The seasonal adjustment mitigated the results for the month. The non-adjusted price change in the first half of May declined 0.3% compared to April, while the unadjusted price was down 10.6% year over year.

“Although we saw stronger declines in April against what is normal, declines in vehicle values have decelerated in early May,” said Jeremy Robb, senior director of economic insights at Cox Automotive, in a news release. “Over the last two weeks, we’ve seen slightly higher sales conversion at Manheim, which has helped to slow the declines in wholesale value trends at the start of the month.”

During the last two weeks, Manheim Market Report (MMR) prices in the Three-Year-Old Index decreased an aggregate of 0.9%, which was slightly above the typical normal decline observed of 0.8% at this time of year. Over the first 15 days of May, MMR Retention, the average difference in price relative to current MMR, averaged 98.7%, indicating that valuation models are lagging market prices. MMR retention is down two-tenths of a point against the prior year at the beginning of May.

The average daily sales conversion rate of 59.3% in the first half of the month was below the May 2019 daily average of 59.9%. The conversion rate has risen half a point from April 2024, indicating that we are seeing a bit stronger buying demand at wholesale markets over the past two weeks.

All major market segments saw seasonally adjusted prices that remained lower year over year in the first half of May:

• Compared to the industry’s year-over-year decline of 11.3%, the pickup and luxury segment outperformed the index overall, with pickups down 10.6% and luxury falling by 10.8% against 2023.
• Performing worse than the industry, SUVs were down 12.4%.
• Mmidsize cars fell by 15.7%, and compacts declined 16.3% year over year.
• Electric vehicles (EVs) were down 15.2% against values for May 2023, while the non-EV segment declined by 10.8% over the same period

All major segments except pickups showed price declines compared to April:

• The industry overall rose 0.3% against the prior month.
• Pickups increased 1% over the same period.
• Faring worse, SUVs were down slightly, falling by just 0.1%.
• Luxury was down 0.7%.
• Compact cars declined by 0.9%.
• Midsize cars fell by 1.2% against April 2024.
• Compared to April, non-EVs showed no change in the first half of May, while EVs were down 1.4% over the same period.

Wholesale Supply Is Flat in Mid-May

Leveraging Manheim sales and inventory data, Cox estimates that wholesale supply ended April at 25 days, up one day from the end of March and up one day compared to April 2023. Wholesale supply is relatively normal for this time of year. As of May 15, wholesale supply was flat against the end of April at 25 days and up one day year over year. However, wholesale supply remains down one day compared to 2019.

Used Retail Vehicle Sales Decrease in April

Meanwhile, retail used-vehicle sales in April decreased from March and were down by 7% month over month, according to vAuto Live Market View data estimates. A total of 1.45 million used vehicles were sold at retail – from both franchised and independent dealers – during April, up 4.8% year over year. Days’ supply at the start of April was down from a revised 46 days at the beginning of March.

“As tax refund season winds down, it’s normal to see consumer demand for used vehicles back off in April, and that’s what we experienced this year as well,” Robb said in a May 15 news release. “With interest rates remaining elevated, consumers need a bit more of a push to buy at this time of year. While prices were lower against 2023, it was enough to attract more buyers from the sidelines at this point. Used retail sales were higher against last year’s levels, but tight inventory and affordability issues continue to be a challenge for the industry.”

The retail used-vehicle sales estimates are based on observed unit changes tracked by vAuto, which specializes in inventory management. April’s used car sales totaled 1.45 million, exceeding April 2023 but lower than the average volume sold in April during the past five years, which was 1.56 million.

CPO Sales Volume Dips in April

Both overall retail used-vehicle sales and sales of certified pre-owned (CPO) vehicles decreased month over month in April, according to data reviewed by Cox Automotive. CPO sales in April were down 2.5%, or over 5,400 units, compared to April 2023. CPO sales last month are now estimated at 209,265, down from 231,927 in March, a decrease of 9.8%. Year-to-date total CPO sales volume is higher by only 0.2% over last year.

Rental Risk Prices Declined This Month

The average price for rental risk units sold at auction in the first 15 days of May was down 13.5% year over year. Rental risk prices also declined by 0.5% compared to the full month of April. Average mileage for rental risk units in the first half of May (at 57,300 miles) was down 2% compared to a year ago and fell by 2.5% against April 2024.

Consumer Sentiment Falls So Far in May

• The initial May reading on Consumer Sentiment from the University of Michigan fell 12.7% to 67.4, which was the lowest level since November. Both future expectations and views of current conditions declined similarly. Expectations for inflation both in one year and in five years increased. Consumers’ views of buying conditions for vehicles fell to the lowest level yet this year but remained better than a year ago. Consumers’ view of vehicle prices improved slightly, but the view of interest rates deteriorated.
• The daily index of consumer sentiment from Morning Consult continues to be volatile but improved last week. Sentiment declined 1.6% in April but was up 0.3% over the last week, although it is down 0.8% so far in May as of the 15th. Sentiment is up only 0.1% year to date.
• The average unleaded gas price, according to AAA, declined 1.2% over the last week to $3.60 per gallon as of May 15, which was up 2% year over year and up 15.8% year to date. In May, gasoline prices are down 1.7%.