The prices dealers pay for cars and trucks at Manheim auctions climbed to all-time highs in September and will likely remain elevated through spring.
Whether dealers are shopping hard because of a shortage of new vehicles or in early anticipation of seasonally strong demand in the spring, or both, it's clear there is an appetite for wholesale cars and trucks.
Wholesale values rose 27 percent last month from September 2020, according to the Manheim Used Vehicle Value Index, which tracks prices of cars and trucks sold at auctions. And September is not likely to mark the peak for this year.
"Basically, the odds favor more increases between now and spring because we're still in a very supply-constrained market in total, in both the wholesale market and the new-vehicle market," Cox Automotive chief economist Jonathan Smoke said in a conference call last week.
He added that relatively high sales conversion rates continue to suggest aggressive buying by dealers. The sales conversion rate at Manheim, a unit of Cox Automotive, was 65 percent last month. It was at 52 percent in September 2019.
With new-vehicle production still hampered by the chip shortage and with consumer demand relatively strong, wholesale values are expected to stay elevated well into next year.