The Manheim Used Vehicle Index in March dropped for the third month in a row, a "natural realignment" with prices in the new-vehicle market, Manheim chief economist Tom Webb said today.
The Manheim index -- adjusted for model mix, mileage and time of year -- stood at 120.4 last month, down from 122.0 in February and 126.2 in March 2012. The index measures changes in used-vehicle prices.
Webb said the late-model used-vehicle market is very "sensitive" to what goes on in the new-vehicle market. Late-model used vehicles now are facing competition from new vehicles being offered with attractive lease deals, he said.
The wholesale supply of used vehicles in the first quarter was flat or up marginally from year-earlier levels, but retail used-vehicle sales rose 12 percent, he said. He said the divergence was evidence that the index is not a reflection of supply and demand.
"There are some nice lease deals out there," Webb told analysts and reporters during Manheim's quarterly conference call today.
"There's been more lease support going on out there in terms of the new-vehicle market. A strictly monthly payment-driven buyer finds it very easy to get into a new vehicle for a lower monthly payment than a used one."
Webb said March is the strongest month for used-vehicle prices, with typically the largest price bounce of the year coming from February to March. Unadjusted for seasonal variations, used prices rose 3 percent in March from February.