ATLANTA — Used-vehicle prices in the United States declined slightly in the last quarter of 2013, but they remained at historically high levels due to strong customer demand, Manheim reported on Wednesday during a conference call.
Wholesale used-vehicle pricing finished 2013 down 1.9% from a year ago. Despite the decline, used-vehicle values remained well above levels seen five years ago when prices started to rise.
Used-vehicle supplies began to increase last year due to increased new-car sales, but strong demand in the retail marketplace kept prices from falling dramatically. Attractive financing and increased employment allowed more consumers to purchase used vehicles. A disciplined approach by automakers and dealers to the new-car market also helped used-car values.
“Wholesale used-vehicle prices continue to hold up better than many expected,” Manheim Chief Economist Tom Webb said. “Automakers and dealers showed restraint in their use of incentives on new vehicles, which helped maintain the value of used vehicles as inventories increased. We also saw an increased emphasis on certified pre-owned vehicles, providing another boost to used vehicle values.”
Year-end pricing for wholesale vehicle segments included:
- Compact and midsize cars both experienced pricing declines in the wholesale vehicle segment. In December, compact car pricing was down 1.3% and midsize car prices declined 3.3% from a year ago. Heightened competition kept prices down for both new and used vehicles in the compact and midsize car segments. Consumers also continued to gravitate toward midsize CUVs, decreasing demand for midsize cars.
- Luxury cars posted the largest pricing decrease of any segment, down 3.8% in December compared to the same month last year. Automakers offered attractive lease terms for new luxury cars, putting price pressure on used vehicles as well.
- Pickups and vans both increased in pricing as the housing recovery continued to drive demand for these vehicles, largely used by small businesses for commercial work. Pickup pricing rose 3.4% and van pricing was up 1.2% in December year over year.
- SUV and CUV pricing continued to drop. A decrease in demand for large SUVs pulled down the segment. The market also had a greater supply of CUVs, as automakers increased production of these vehicles for the new-vehicle market. SUV and CUV prices were down 3% in December compared to the same month last year.
Wholesale used-vehicle prices should decline slightly in early 2014, but they should remain at healthy levels, Webb said. An increase in new-car sales and off-leased vehicles will increase supply, but consumer demand also should remain high.
“We do not expect fundamentals to materially change in 2014, although a few missteps may occur along the way,” Webb said. “In the first quarter, for example, it’s possible that wholesale supplies may rise faster than expected, and those vehicle segments dependent on tax-refund-fueled demand may once again be disappointed by unpredictable, uneven, and relatively low disbursements from the IRS.”