ATLANTA — Wholesale used-vehicle prices fell slightly in January, registering a 0.3% decline from the prior year, according to Manheim Chief Economist Tom Webb. 

Webb stressed that wholesale prices remained remarkably stable despite “sharply rising” supplies of used vehicles, a trend that began in early 2016 and shows no signs of abating.

“Give credit to a retail used-vehicle market that enabled dealers to quickly and profitably sell their auction purchases,” he wrote.

Sales of certified pre-owned (CPO) units continue to outpace new-vehicle sales. The four-year trend continued into January, when CPO sales rose by a modest 0.8%. Sales of new cars and light-duty trucks remained flat at a seasonally adjusted annual rate (SAAR) of 17.5 million units.

Webb indicated that most analysts predicted a drop in January new-vehicle sales after a strong December. He said incentives, reduced fleet sales and higher transaction prices — thanks to model mix shifts and the growing popularity of higher trim levels — helped prop up sales. But he said the imminent impact of unsold new-vehicle inventory could not yet be calculated.

“The topline days’ supply numbers were scary, but less so after accounting for seasonal issues, mode shifts, temporary factors and reduced fleet volumes,” Webb wrote. “Still, production cuts seem warranted.”

Finally, the report noted that the U.S. unemployment rate continues to fall. The market added 227,000 jobs in January for a total of 14.5 million new jobs added since 2011. Although January wage growth failed to impress, Webb said the stability of the labor market “suggests that consumers will be willing to take on more used-vehicle loans and that lenders will be willing to lend.”

To read the full report, click here.