Used-vehicle prices drop for 3rd straight month in June
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July 24, 2006 01:00 AM

Used-vehicle prices drop for 3rd straight month in June

Arlena Sawyers
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    Weak year-over-year retail sales helped depress wholesale prices of used vehicles in June for the third straight month. But last month's prices were slightly ahead of those in June 2005.

    Last month, used vehicles sold at auction for an average price of $9,798, according to ADESA Analytical Services. That was 2.1 percent less than May's average price but 1.1 percent higher than the average in June 2005.

    Retail sales of used cars and trucks were down 4.8 percent last month from June 2005, to 4.68 million vehicles, reports CNW Marketing Research Inc., of Bandon, Ore. But compared with the previous month, CNW says, sales rose 13.4 percent in June.

    Among vehicle segments, big used SUVs fared worst in June. The average wholesale price of large SUVs last month was $12,994. That was 9.1 percent lower than in June 2005 and 4.7 percent lower than May of this year.

    Tom Webb, chief economist at the Manheim auction company, says high inventories of new large SUVs, and generous incentives on many of them, have made big used SUVs relatively less valuable.

    Tom Kontos, vice president of industry relations and analytical services at ADESA Inc., says the slump in retail used-vehicle sales led to less aggressive bidding by dealers at auctions. That helped lower wholesale prices, he says.

    "Dealers don't have to restock to the same degree that they would if they had strong retail sales," Kontos says.

    After large SUVs, used upscale cars took the biggest tumble in wholesale prices last month. The segment's average price in June was $13,391, down 7.1 percent from June 2005 and off 5.1 percent from May 2006.

    "It's tough to get more money for those expensive cars," Kontos says. The luxury-vehicle market is increasingly crowded and competitive, he adds.

    Manheim's Webb says factors other than wholesale prices, such as profit margins and inventory turn, are more favorable to the used-vehicle market.

    CarMax Inc. reported an 11.1 percent increase in gross profits per used vehicle in its fiscal quarter that ended May 31 over the year-ago period. The used-vehicle retailer "attributed part of that to the decline in wholesale prices," Webb told analysts this month.

    Manheim's Used Vehicle Value Index stood at 112.9 in June, unchanged from May 2006 and up from 110.7 in June 2005.

    The Manheim index measures monthly changes in used-vehicle prices. It is adjusted for model, mileage and season.

    You may e-mail Arlena Sawyers at [email protected]

    CA7849721.PDF

    Average wholesale used-vehicle prices, June - 07-24-2006

    CA7849721.PDF >
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