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Kontos Reports Signs of Recovery in Wholesale Market

February 12, 2009

CARMEL, Ind. — Tom Kontos, Adesa Inc.'s chief economist, noted several positive indicators in his most recent assessment of the U.S. wholesale vehicle market. The latest edition of Kontos Kommentary points to increased activity in the auction lane and "milder" declines in new- and used-car sales, based on data from Adesa, CNW Research and Autodata Corp.

"Turning to January," Kontos wrote, "average prices were again up sequentially, though they remain down on a year-over-year basis (but less so than in previous months). Other signs of wholesale market recovery are high auction conversion rates (vehicles sold as a percentage of vehicles offered), strong dealer in-lane and online participation, increased auction sales volumes, and reduced auction inventory levels."

Kontos reported an average price of $9,263 for wholesale used vehicles in January, a year-over-year decline of 4.8 percent, but a 2.7 percent increase from the prior month. Compared to year-over-year declines of 11.3 percent, 10 percent and 7.4 percent in October, November and December, respectively, the figures illustrate "progressively smaller" declines.

The latest data from Bandon, Ore-based CNW Research shows a 2.9 percent year-over-year drop in used-vehicle sales for franchise dealers and 15.7 for independent dealers, all improvements over December numbers. Woodcliff Lake, N.J.-based Autodata reported a 9.9 percent increase for certified pre-owned sales from January 2008.

"The key to sustaining the current wholesale market recovery is a continued improvement of retail used vehicle sales," Kontos wrote. "This will allow dealers to sell the vehicles they recently purchased from auctions and keep them coming back for more."

The full report can be found here.

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