Manheim economist sees 'healthy realignment' in used-vehicle prices
Used-vehicle prices are undergoing a “healthy realignment” that will continue next year with some upticks along the way, Manheim’s chief economist said Friday.
“Sellers certainly knew that 2011 prices could not be sustained. Buyers knew they were paying too much, but of course they had no choice,” Tom Webb told reporters and analysts during a conference call. “I believe the continued market realignment will leave us in a better place with prices still high but not disruptively so.”
After five months of declines, the Manheim Used Vehicle Value Index stood at 120.7 in September, unchanged from August but down 2 percent from September 2011.
Manheim’s index started in 1995 at 100 and measures used-vehicle price changes based on vehicle age, mileage and time of year.
Webb also said he believes that the run-up in used-vehicle prices over the last few years is not the sole result of tight used-vehicle supplies. He said that may have been the case in 2009 but became less so in 2010 and 2011 and was a “nonissue” in 2012.
As evidence, he said the number of rental units entering the wholesale used-vehicle market in the first half of the year increased by a double-digit percentage but did not drag down prices in the relevant segments.
“That, I believe, is a testament to the manufacturers’ discipline on the new vehicle side of the market, a discipline which was enabled by permanent restructuring in the industry,” he said. “I do not believe we are headed back to the wicked ways of the past when many manufacturers’ sales and marketing tactics were in direct opposition to the goal of protecting residual values.”
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