If used-vehicle prices fall in October, I wouldn’t be surprised. If they don’t fall, I wouldn’t be surprised at that, either.
Going into 2016, there were widespread expectations that the influx of off-lease cars and trucks hitting the market would ding used-vehicle values. But that hasn’t really happened.
In fact, used-vehicle prices have steadily increased most of this year.
The Manheim Used Vehicle Value Index, adjusted for vehicle make, mileage and time of year, stood at 126.9 in September, the same as in August, and only 1.7 percent higher than September 2015.
Except for August, when it hit 127, the index is at its highest point since June 2011.
Wholesale used-vehicle prices typically undergo the strongest “seasonal headwind” between Labor Day and Thanksgiving, said Cox Automotive Chief Economist Tom Webb in his monthly commentary accompanying the index, hinting that values could drop.
If used-vehicle prices typically fall in the fall, that would imply they will again this year, even ignoring the influx of off-lease units. But in the same commentary, Webb effectively hedges his bets, pointing to several factors contributing to used-vehicle price strength.
Some of it has to do with unrelenting demand for used pickups and SUVs and a higher-than-expected new-vehicle sales rate. And transaction prices on new-vehicle sales continue to climb, taking used-vehicle prices along for the ride.
When you add it up — on a vehicle mix, mileage and time-of-year basis — used-vehicle prices this year have been high, and if you take the third quarter by itself, they’ve been extremely high, by Manheim’s calculations.
I’m very interested to see how used-vehicle prices move in October. But whatever happens, I won’t be surprised.