Used Vehicle Values Set New Record for Third Straight Month

By Jonathan Smoke
Cox Automotive

Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 0.14 percent month-over-month in September. This brought the Manheim Used Vehicle Value Index to 139.9, which was a 3.7 percent increase from a year ago and a new record high for the Index.

Looking at trends in weekly Manheim Market Report (MMR) prices, the abnormal summer bounce that started in June ended after 11 straight weeks of price appreciation. September saw several continued weeks of normalizing depreciation. Even after that normalization, three-year-old vehicles are now worth 4.5 percent more than they would normally be worth had typical depreciation occurred instead of the appreciation observed this year. 

On a year-over-year basis, all major market segments saw price gains in September, but more affordable vehicles are seeing the greatest increases in values. Compact cars and midsize cars outperformed the overall market, while vans, utility vehicles, and pickups underperformed the overall market.

Vehicle sales slide in September. According to Cox Automotive estimates, used vehicle sales volume was down two percent year-over-year in September. The annualized pace of used vehicle sales was up almost one percent over last year led by franchised used vehicle sales (up one percent in September on an annualized basis) and private-party used vehicle sales (up four percent in September on an annualized basis). We estimate the September used seasonally adjusted annual rate (SAAR) to be 39.4 million, down from 39.7 million last September.

September new vehicle sales were down six percent year-over-year, with one less selling day compared to September 2017. The September SAAR came in at 17.4 million, down versus last year’s 18.1 million. Cars continue to see sharp declines as sales in September fell 21 percent compared to last year. The market share for cars came in under 30 percent for the second straight month. Light trucks outperformed cars in September and were up two percent year-over-year. New vehicle sales year-to-date are up less than one percent versus last year. 

Fleet has been the driver of the strength in the new vehicle market year-to-date, and fleet purchases increased in September relative to August. Despite the monthly total decrease in new light vehicle sales, the volume of fleet sales was up two percent year-over-year and is up seven percent year-to-date. New vehicle sales into the rental channel were up less than one percent in September versus last year.

New vehicle inventories came in under 4 million units for the fifth consecutive month.

Rental risk pricing strengthens. The average price for rental risk units sold at auction in September was up six percent year-over-year. Rental risk prices were flat compared to August. Average mileage for rental risk units in September (at 44,300 miles) was up five percent compared to a year ago and up two percent month-over-month.  

Continued strong economic momentum. Second quarter economic growth as measured by gross domestic product was left unchanged at 4.2 percent in the third and final estimate. Personal spending slowed down in August as personal income, disposable income, and spending all grew the same amount at 0.3 percent. The personal savings rate, the net left over after all spending relative to disposable income, remained at 6.6 percent, the lowest level this year. Consumer Confidence, as measured by the Conference Board, increased in September to 138, the highest since September 2000. In the Conference Board data, the percentage of households reporting plans to purchase a vehicle in the next six months improved slightly to 13.4 percent. This is up from last year when plans were at their lowest point for 2017.