Sunday 23 October 2016
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Used Car Values Rise After 4 Month Slide

Used Car Values Rise After 4 Month Slide

Good news for all those who are thinking of trading in a vehicle for a new one. Wholesale prices of used vehicles in June were up slightly after four consecutive months of decline, the Manheim Used Vehicle Value Index released shows.

The narrow movement in the index is a sign of pricing strength as wholesale supplies continue to grow. This strength “is a testament to solid retail markets, greater operating efficiencies and good remarketing practices,” Manheim said in its monthly report accompanying the index.

In June, the index stood at 123.9, up from 123.8 in May but down from 124.0 in June 2014. Four straight months of decrease in the index drove an overall decline of 0.8 percent in the second quarter.

Despite the quarterly decline, June’s index was still higher than the 2014 average of 123.2. The index measures changes in used-vehicle values and is adjusted for vehicle model mix, mileage and time of year.

The average auction prices of rental risk units, retired vehicles being sold by rental-car fleets, decreased by about $2,000 between March and June as older and shabbier vehicles dragged down overall prices, the report said. In the second quarter of this year, 55 percent of those vehicles sold at auction were from two model years past, compared to 23 percent in the second quarter of 2014.

The average mileage of rental risk vehicles sold at auction has also spiked to about 50,000 miles, compared with the 45,000-mile average at the end of 2014.

The reduction in auction prices may be attractive to dealers, but many of these vehicles are not of “retail-ready quality” given the increase in age and mileage, Tom Webb, chief economist at Cox Automotive, said in a conference call. Manheim is a unit of Cox Automotive.

If dealers don’t have the resources to bring these older, rougher vehicles up to snuff, “the savings are not as big as they appear,” Webb said.

Pickups and vans were the only segments to post value increases in June from the year-earlier month. Prices of pickups increased 6.7 percent and van prices rose 2.7 percent.

Compact cars experienced the most dramatic price decreases in June, with overall wholesale prices down 7.2 percent from June 2014.