Strong retail demand for used vehicles helped lift wholesale prices of used cars and trucks in April, defying market expectations, the nation’s largest auction company said.
Manheim, citing data from CNW Research, said Wednesday that dealer sales of used vehicles rose 4 percent in April and 2 percent for the first four months of the year. It also said that the seven publicly traded dealership groups collectively increased their sales of used cars and trucks more than 10 percent in the first quarter.
The strength of the used-vehicle market is reflected in the Manheim Used Vehicle Value Index, which stood at 124.9 last month, up from 124.4 in March and 119.2 in April 2013. Last month’s index reading was its highest since May 2012, when it stood at 125.1.
The Manheim index, released Wednesday, is adjusted for vehicle make, model and time of year. The index started in January 1995 at 100 and measures changes in used-vehicle prices.
“More important,” Manheim’s monthly commentary said, the public dealership groups’ collective “net profits were at record levels due to greater throughput, increased operating efficiencies, and strong F&I income.”
A lower volume of retired rental units sold by rental companies at auctions in April helped tighten the overall used-vehicle supply and contributed to higher prices, the commentary said.
That is in contrast to some industry watchers’ expectations that used-vehicle inventory would rise, causing some easing of used-vehicle values.
But Ricky Beggs, editorial director at Black Book, predicted last month that used-vehicle prices would continue to rise through April. He said the harsh winter pushed many spring used-vehicle sales into April, forcing dealers to aggressively pursue inventory at auctions throughout the month. He expects that to change this month.
Beggs said in a statement: “We anticipate easing off these monthly highs in May now that the selling activity will resume its typical patterns entering the summer months.”