ORLANDO, Fla. -- Wholesale prices of used vehicles won't rise much this year, the two largest auto auction companies agree.
Analysts for Manheim and ADESA Inc. made separate presentations at the National Automobile Dealers Association convention here this month. Many of their conclusions were similar.
Manheim chief economist Tom Webb said he does not expect used-vehicle prices to grow much this year because of the large increases in 2004 and 2005. Since April 2003, wholesale prices have risen 13.6 percent, he said.
"Previously, prices were beaten down on the used-vehicle side a little more than they should have (been) relative to new-vehicle prices," Webb told Automotive News. "I think that balance has been restored now that we had the nice increases in 2004 and 2005."
The average wholesale price of a used vehicle in January was $9,837, ADESA reported. That was 5.1 percent higher than the average price in January 2005 but 0.4 percent below the average price in December 2005.
Sales of used cars led last month's overall vehicle price increase. Tom Kontos, ADESA's vice president of industry relations and analytical services, cited a shortage of used cars in January.
Rental cars stayed in fleets longer than usual to accommodate customers whose vehicles were damaged in storms that hit the Gulf Coast last year, Kontos said. The number of cars coming off lease also declined last month, he added.
Dealers bolstered used-car inventories last month for the spring selling season, Kontos said. That also strengthened prices, he said.
"The demand is there for cars, but the supply is relatively short," Kontos said in an interview. "That's coming to an end as we get further away from those months in which the hurricanes were a major factor."
Automakers sold about 265,000 more vehicles to rental and commercial fleets in 2005 than they did in 2004. There was a comparable increase in 2004 over 2003. Some of those vehicles re-entered the market last year and will continue to roll into auctions this year, Kontos said. The addition of those vehicles will help contain price increases, he predicted.
The average price of used cars increased 9.5 percent in January compared with January 2005. That price, $8,998, was 0.6 percent higher than in December 2005.
Large used SUVs brought an average wholesale price of $13,750 last month. That price rebounded from record lows last fall, but lagged the January 2005 price by 5.2 percent. It was 0.3 percent below the average price in December 2005.
"Vehicles that tend not to do well fuel economywise have participated in the price firming," Kontos says, "but not nearly to the same degree as the more fuel-efficient segments."
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