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Manheim Index Inches Down in April

May 08, 2012

Wholesale used-vehicle prices declined marginally in April, according to the Manheim Used Vehicle Value Index, which stood 126.1 vs. 126.2 in March.

In April, year-over-year comparisons came up against much harder comps and, as a result, the overall Index as well as many segments showed annual declines in pricing despite valuation remaining at historic highs.

“The auto industry has significantly outperformed the overall economy in this recovery,” the report stated. “That pattern continued in April as most economic indicators pointed towards slower growth, while new- and used-vehicle retail sales continued to show strength, used-vehicle operations produced growing profits, and bidding activity at auction remained solid.

 New cars and light-duty trucks sold at a seasonally adjusted annual rate of 14.4 million in April, up from 14.3 million in March, according to Manheim. Due to a strong February, the sales pace for the first four months was 14.5 million, which, even after recent upward revisions, is still on the high side of most full-year forecasts.

“New vehicle sales strength continues to be achieved without undue reliance on incentives or sales into fleet,” the report stated. “In fact, in April, incentive spending was at multi-year lows. The year-over-year change in new vehicle sales into rental declined in April, after frontloaded purchases pushed first quarter rental sales up more than 20 percent.”

Used-vehicle retail volumes posted further gains in April and on year-to-date basis despite the total dollar amount of individual income tax refunds being down for the year. The number of tax refunds (often a better indicator) is, however, up slightly (less than one percent) through the end of April.

Statistics reflecting higher-priced used-vehicle sales continued to run at a record pace. For example, although CPO sales were reported to have declined in April, they are still up significantly year to date, according to Manheim. Additionally, results for the seven publicly traded dealership groups showed 11 consecutive quarterly gains in same-store used vehicle retail unit volumes.

“In April, compact cars had a year-over-year decline in adjusted pricing,” the report read. “That is simply a result of last year's exceptional strength in the wake of supply disruptions. This impact will be even more pronounced next month.”

The reverse situation played out for pickup trucks, which showed the largest year-over-year increase of the major market classes. As witnessed by activity in the new-vehicle market, pickups will only need a small boost from improved employment conditions in construction, home services, and general trades to take off. “Right now, as to be expected, trade-ins on new pickups have been much older pickups than normal,” Manheim said in its report.

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