Despite June's spike in new-vehicle sales propelled by General Motors' Employee Discount for Everyone program, used-vehicle sales also rose in June.
But wholesale prices of used vehicles fell by 2.3 percent last month from May 2005. That's in part a reflection of the changed U.S. marketplace, analysts say.
CNW Marketing/Research Inc. of Bandon, Ore., reports that 4.91 million used vehicles sold at retail in June. That was a 4.5 percent increase from the year-ago month, CNW says.
Franchised dealerships sold
1.91 million of those vehicles, CNW reports. That was a 6.7 percent increase over June 2004.
ADESA Corp. says the average wholesale price of used vehicles in June was $9,690. That was 2.3 percent lower than the May price. It was 3.3 percent higher than the average price in June 2004.
Manheim's Used Vehicle Value Index fell from 112.1 in May to 110.7 in June. That change reflected a 1.2 percent monthly decrease in wholesale used-vehicle prices, Manheim says. The index, which measures changes in used-vehicle prices, started at a base of 100 in January 1995. Manheim adjusts the index for model mix, mileage and time of year.
Ricky Beggs, editor of Black Book, a wholesale vehicle price guide, says wholesale used-vehicle prices started falling in May. The change was most pronounced, he says, in the full-sized pickup and SUV segments. Not just GM vehicles were affected, he says.
Beggs notes that used-vehicle prices strengthened from January through early May, even as gasoline prices rose. "It's just the market readjusting itself," he says.
GM's used vehicles took a bigger wholesale price hit last month than did the overall market, says Tom Webb, Manheim's chief economist. "A lot of that is because the employee discount program was phenomenally successful," he says.
Tom Kontos, ADESA's vice president of industry relations and analytical services, says analysts estimate GM increased its spending on new-vehicle sales incentives in June by $135 to $450 per vehicle over May levels.
That spending weakened auction demand and wholesale prices for used vehicles, Kontos says. So did the growth of used-vehicle inventories, replenished by trade-ins generated by new-vehicle sales, he adds.
Through its captive finance company, GM is offering special finance rates this summer on some of its certified used vehicles. Qualified buyers can get rates of 2.9 to 4.9 percent on various 2000-05 Chevrolet, GMC, Pontiac and Buick models. The program began July 1 and ends Sept. 30.
Lower wholesale prices enable dealerships to stock used-vehicle inventories more cheaply. But they also make it harder to satisfy customers who expect top dollar for their trade-ins, dealers say.
Tim Walters, a Chevrolet dealer in Elkland, Pa., says a customer wanted to trade her 2000 Jaguar S-Type with 80,000 miles to buy a new $50,000 Chevrolet Avalanche SUV. The customer was upset that Walters would offer no more than $11,000 for her car.
In a traditional deal, he could have offered her about $16,000, Walters says. But GM's employee-discount program restricts dealerships' flexibility in marking up new-vehicle prices, he adds. Still, Walters insists he likes the campaign.
Walters says the customer "ended up buying elsewhere, but there wasn't much we could do about it."