A drop in retail used-vehicle sales contributed to a decline in prices in October when compared with the previous month, but the adjustment was normal and expected, analysts say.
Used-vehicle prices last month declined 3 percent compared with September to $9,447, according to ADESA Analytical Services. But last month's average was still about 10 percent higher than the October 2008 average.
Some of the price softness in October resulted from weaker retail demand, said Tom Kontos, vice president of customer strategies and analytics at ADESA. Citing data from CNW Marketing Research, he said used-vehicle sales among franchised dealers plunged 31 percent last month compared with October 2008, to 590,926 units.
Kontos said sales also were hurt by seasonal patterns and consumers taking a breather from used-vehicle purchases generated by the cash-for-clunkers new-vehicle program.
Used-vehicle sales by independent dealers were off 7 percent to 671,829 units in October compared with October 2008, according to CNW.
But Kontos said he expects used-vehicle sales to recover.
"In good times consumers buy lots of used cars, and in bad times used-car sales don't drop as badly as new cars," he said.
"Consumer confidence figures show consumers are still antsy about whether this is a real recovery or not. If they have to replace a vehicle and are worried about spending money on a new car, they may opt for a used car."
Tom Webb, Manheim's chief economist, said new-car incentives in October were relatively low, and new 2009 model vehicles were in short supply. But he said the industry still saw "aggressive pricing" of 2009s to clear them out.
"That put some downward pressure on late-model used-car prices," he said.
Although used-vehicle prices were down in October compared with September, seasonally adjusted prices in the first half of November showed a slight increase over last month, Webb said.
Juan Flores, director of vehicle valuation at Kelley Blue Book, said used-vehicle prices, especially among trucks, had increased so much this year that an adjustment was inevitable.
"Those prices didn't make sense," Flores said.
Ricky Beggs, managing editor of Black Book, said the used-vehicle market is typically soft this time of year.
"It's nothing to be alarmed about," Beggs said. "There's an old saying in the industry: When the leaves fall, prices fall. The activity is just not as strong."