Weather weakens prices of late-model used cars

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Last month, the average price decline of 2008-12 used vehicles was steeper than that of the previous month and steeper than expected perhaps because of the harsh weather in much of the country, said Ricky Beggs, editorial director at Black Book. But by mid-February, he added, the price slide had moderated from January's pace.

According to Black Book data, the average price of 2008-12 used vehicles depreciated 1.9 percent to $18,575 in January. Beggs said the average monthly depreciation should have been in the 1.3 to 1.5 percent range. The decrease in December was 1.4 percent.

In contrast, in the first full week of February, 36 percent of the price changes monitored by Black Book were increases, the highest percentage of increases since May. But the percentage of vehicles whose prices increased dropped to a more seasonal 20 percent as of mid-February.

The unusually high 36 percent level might have been because of a "break between winter storms," Beggs said, adding that he knows of one auction that closed because of the winter storms, then recovered with heavy activity when the weather improved. "The other thing for February is we are more in tune with the 'tax season' market," he said.

"There were years when the tax season started affecting the used values positively the last couple of weeks of December and all of January," he said. But in the last couple of years, "it is getting slightly later into the calendar before the uptick appears" in wholesale prices.

Dealers traditionally stock up on used vehicles early in the year, anticipating buyers who use their tax refunds for down payments.

Data from ADESA Inc.'s Analytical Services shows that the average wholesale price of all used vehicles in January was $9,983, up 3.4 percent from the average price in December and down 0.5 percent from January 2013.

"Wholesale volume growth, especially from off-lease vehicles, continues to put downward pressure on prices and weather conditions restricted retail from offsetting this impact," Tom Kontos, ADESA's chief economist, wrote in his monthly online commentary.

Kontos also noted that the average price of used vehicles sold by manufacturers, which tend to be later model-year vehicles, was down 2.0 percent last month from December but up 4.0 percent from January 2013.

You can reach Arlena Sawyers at asawyers@crain.com.


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