Cornered Fed Announces First Rate Cut Since 2008

Facing new global realities and pressure on multiple fronts, the Federal Reserve cut interest rates for the first time in more than a decade in an attempt to prolong the economic expansion.
Facing new global realities and pressure on multiple fronts, the Federal Reserve cut interest rates for the first time in more than a decade in an attempt to prolong the economic expansion.
Depreciation through the first half of 2018 stood at 13.7%, much lower than the 16.3% rate recorded in the year-ago period. Analysts say upstream remarketing has kept values strong despite the tidal wave of off-lease vehicles that returned to market during the period.
Average wholesale prices in June were down vs. June but up vs. a year ago. A drill down into the data, however, reveals price softening on a year-over-year basis when accounting for sales type, vehicle age, model class, and mileage, KAR Chief Economist Tom Kontos said this week.
Average wholesale used-vehicle prices reached $11,141 in April, a 2.2% increase from March and a 2.5% increase from a year ago, Tom Kontos reported. The only three segments registering declines were compact, mid-size, and luxury cars.
While wholesale prices were below year-ago levels for cars, they were up for trucks. The revelation prompts KAR Auction Services' chief economist to revisit a study he began during the industry's first experience with $4 gas back in 2008, when the price gap between trucks and cars closed dramatically.
February provided “further concrete evidence of softening” of used-vehicle prices, ADESA's Tom Kontos wrote in his monthly Kontos Kommentary.
Wholesale used-vehicle prices in January averaged $10,945, a 6.7% increase from a year ago and a 2.8% rise from the prior month, according to ADESA Analytical Services.
Wholesale used-vehicle prices in December averaged $10,642, which was essentially flat with the prior month but up 3.9% from a year ago, according to ADESA Analytical Services.
As has been the case for much of the year, average wholesale used-car prices were down on a year-over-year basis. In October, the average wholesale used-vehicle price fell by 1.2% compared to the year before. Trucks, on the other hand, continued to realize year-over-year increases in wholesale prices. Compared to last year, truck prices are up 5.1%.
ADESA's chief economist reported this week that the continued strength of the truck segment drove a year-over-year increase in wholesale prices, while weak car sales contributed to a month-over-month price decline.
The secure and easy all-access connection to your content.
Bookmarked content can then be accessed anytime on all of your logged in devices!
Already a member? Log In