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Thursday 8 December 2016
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Used Car Prices Remain High

Used Car Prices Remain High

Good news if you plan to make a trade in the month of July. Prices of used compact cars stopped falling and prices of used pickups kept climbing.

That was the scenario in June that lifted overall prices of used vehicles, as reflected in the Manheim Used Vehicle Value Index, released Friday. The index stood at 126.2 in June, up from 123.9 in June 2015 and from 124.5 in May.

That pushed wholesale prices to their highest level in more than four years, just 1.3 percent below the record high reached in May 2011, said Tom Webb, chief economist at Cox Automotive, Manheim’s parent company.

Rising volumes of off-lease vehicles had been expected to put downward pressure on used cars and trucks this year, but strong used-truck prices – particularly for pickups and cargo vans – offset low used car prices and buoyed overall prices last month, Webb said.

Without the strength in truck prices, the index “would certainly be down on a year-over-year basis, as opposed to being up,” said Webb during the company’s quarterly conference call with journalists and analysts.

“The two strongest segments are pickups and cargo vans. Passenger minivans are not significantly higher than the overall,” he said.

Prices of compact cars have been dropping but may have “finally” found their “floor,” Webb said. Prices of midsize cars as a segment are still relatively weak and in recent weeks, on a month-over-month basis, performed worse than compact cars.

“Every segment is eventually going to find its bottom,” he added.

He noted that outstanding recalls are supporting prices.

There are “a lot” of vehicles parked at auctions that cannot be sold because they are under recall, Webb said. Parts to repair those vehicles are not readily available, which will keep those vehicles from returning to the market quickly, he said.

“There is some concern that if you were able to wave a magic wand and fix all these open recalls and push them on the market, that would have a depressing impact on price,” he said.

“The fact of the matter is there is no magic wand and they will come back into the market in a relatively steady state.”

The Manheim index measures changes in used vehicle values and is adjusted for vehicle make, model and time of year.