DETROIT -- The monthly Manheim Used Vehicle Value Index continued to rise in February as a result of tight used-vehicle supplies and robust retail sales of used cars and trucks.
The index stood at 118.1 last month, up from 117.6 in January 2010 and 105.5 in February 2009.
Manheim chief economist Tom Webb said lower new-car sales and the trade-ins associated with them have helped contain used-vehicle inventories.
At the same time, independent dealers sold 561,431 used vehicles in February, an increase of almost 9 percent when compared with sales in February 2009, said Webb, citing data from CNW Marketing Research.
Used-vehicle sales by franchised dealers totaled 584,972 in February 2010, almost 3 percent lower than sales in the year-ago month.
Webb said the biggest threat to used-car values in the near term is the ramp-up of new-car incentives by automakers, presumably to compete with incentives being offered by Toyota Motor Corp. New-car incentives generally lower used-vehicle values, especially late-model used vehicles.
“A lot depends on how aggressive the incentives get; 0 percent financing -- it will depend on how far down the credit scale” automakers are willing to subsidize, Webb said.
Not surprisingly, over the past couple of weeks, Toyota’s residual values for recalled models have weakened relative to the rest of the market, given the publicity surrounding the recall and sales suspension, Webb said.
But he pointed out that Toyota vehicle prices were underperforming compared with their history, a result of past lease programs before the recall. Its values also may have suffered if lenders temporarily dropped loan amounts to match guidebook predictions.
For those reasons, Webb said, “We expect part of the recent decline will be reversed.”
The Manheim index started in January 1995 at 100 and is adjusted for model mix, mileage and time of year.