Used wholesale prices up — now what?
Skip to main content
Sister Publication Links
  • Automotive News Canada
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
AN-LOGO-BLUE
Subscribe
  • Subscribe
  • Account
  • login
  • HOME
  • NEWS
    • Dealers
    • Automakers & Suppliers
    • News by Brand
    • Cars & Concepts
    • Coronavirus Coverage
    • China
    • Shift
    • Mobility Report
    • Special Reports
    • Digital Edition Archive
    • This Week's Issue
    • When the chips are down: Big Tech’s needs put dent in car output
      GHSP
      Mich. supplier showcases technologies to fight distraction, virus
      Shoppers to choose how they use digital retail
      Ford's ‘Finish Strong' ad sets right tone for '21
    • Hyundai Motor Group sets first overseas fuel cell plant in China
      Inside Huawei's push to develop smart roads that talk to driverless cars
      Vehicle production line at GAC-Honda, Honda's joint venture with GAC Motor Co.
      Honda books sales growth in 2020; Nissan slips
      Mercedes-Benz China
      Mercedes, Audi, BMW post record high deliveries for 2020
    • Detroit Aerial Panorama during sunset
      Developing future workers to fuel growth in mobility
      Getting around in Las Vegas often involves long waits for a crowded monorail ride, below, or taking escalators up and down to cross elevated pedestrian walkways along the Strip.
      Las Vegas offers best and worst in transportation challenges
      Where is transportation headed?
      In pandemic environment, RV industry ‘roaring back'
    • Why Waymo boss says ‘self-driving' needs to go
      Revel
      The moped-sharing startup with thousands of EVs and hundreds of collisions
      ELMS_Headquarters_i.jpg
      EV maker Electric Last Mile to move HQ in suburban Detroit
      Uber logo on a car window
      Uber appeals $59M Calif. fine over sexual assault data request
    • Elon Musk interview
      Tesla’s Model Y, on sale since March, is a showcase of EV technologies competitors will benchmark.
      Technologies of Electrification
      Cadillac’s Lyriq EV will be unveiled Aug. 6.
      Future Product Pipeline
      A CALL TO ACTION
    • When the chips are down: Big Tech’s needs put dent in car output
      In 14-brand Stellantis, who will make the cut?
      Why Waymo boss says ‘self-driving' needs to go
      Hot topics at virtual CES: AVs, air taxis and drones
    • Access F&I
    • Fixed Ops Journal
    • Marketing
    • Used Cars
    • Retail Technology
    • Sales
    • Best Practices
    • Dealership Buy/Sell
    • NADA
    • NADA Show
    • Automakers
    • Manufacturing
    • Suppliers
    • Regulations & Safety
    • Executives
    • Talk From The Top
    • Leading Women Network
    • Guide to Economic Development
    • PACE Awards
    • Management Briefing Seminars
    • World Congress
    • Aston Martin
    • BMW
      • Mini
      • Rolls-Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Fiat Chrysler
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Ferrari
      • Fiat
      • Jeep
      • Maserati
      • Ram
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
      • Holden
    • Honda
      • Acura
    • Hyundai
      • Genesis
      • Kia
    • Mazda
    • McLaren
    • Mitsubishi
    • Nissan
      • Infiniti
    • PSA
      • Citroen
      • Opel
      • Peugeot
    • Renault
    • Subaru
    • Suzuki
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
      • Seat
      • Skoda
    • Volvo
    • (Discontinued Brands)
    • Virtual reveals (Sponsored)
      • GENESIS: 2021 GV80
      • KIA: 2021 K5
      • LEXUS: 2021 IS
      • NISSAN: 2021 Rogue
      • TOYOTA: 2021 Venza and 2021 Sienna
    • Auto Shows
      • Detroit Auto Show
      • New York Auto Show
      • Los Angeles Auto Show
      • Chicago Auto Show
      • Geneva Auto Show
      • Paris Auto Show
      • Frankfurt Auto Show
      • Toronto Auto Show
      • Tokyo Auto Show
      • Shanghai Auto Show
      • Beijing Auto Show
    • Future Product Pipeline
    • Photo Galleries
    • Car Cutaways
    • Design
  • OPINION
    • Blogs
    • Cartoons
    • Keith Crain
    • Automotive Views with Jason Stein
    • Columnists
    • China Commentary
    • Editorials
    • Letters to the Editor
    • Send us a Letter
    • Nikon turns lens on auto factory, build quality
      Bosch_information_domain_computer web.jpg
      Bosch, Continental battle to supply the brain of the connected car
      A victory lap for Detroit car design
      Stellantis_logo_blue_background web.jpg
      In 'merger of equals,' PSA is buying FCA, Stellantis prospectus says
    • view gallery
      1 photos
      The Bridge
      view gallery
      12 photos
      Leo Michael's best of 2020
      view gallery
      1 photos
      UAW Deal
      view gallery
      1 photos
      Exit Voluntarily
    • Shifting gears away from the stick shift
      SEMA still a wonderful circus
      Penske still has plenty of races to win
      Ford's turn in the hot seat
    • January 12, 2021 | Automotive industry shined in 2020
      December 8, 2020 | In a year that lacked luster, All-Stars showed how to shine
      November 24, 2020 | Female talent in automotive is expanding
      November 17, 2020 | Automakers are getting creative with vehicle reveals
    • Dave Versical
      Female CMO is new norm
      Daron Gifford
      Biden era holds big promise for future of electric vehicles
      A show we love to hate ... but hate to miss
      Magna car output web.jpg
      Who will build the Apple car?
    • Is sales recovery nearing an end?
      Beijing's uphill battle to boost EV sales
      Nasdaq-like Star Board poised to become key finance platform
      Virus outbreak upends ranks of EV startups
    • Ford's ‘Finish Strong' ad sets right tone for '21
      UAW settlement brings justice, voting rights
      Dealers should be treated as partners in EVs
      Bergstrom Chevrolet-Buick-GMC-Cadillac of Oshkosh donates a new truck to Habitat for Humanity.
      Commitment to safety begets lasting loyalty
    • Is banning ICEs in our best interests?
      GM should share EV risk with dealers
      Ready to buy Mirai, but where to fuel?
      From Toyota store to hydrogen highway
  • DATA CENTER
  • VIDEO
    • AutoNews Now
    • First Shift
    • Special Video Reports
    • Weekend Drive
    • AutoNews Now: Stellantis may reconsider Peugeot's U.S. return
      AutoNews Now: Toyota to pay $180M in U.S. emissions settlement
      AutoNews Now: NTSB to automakers: Improve EV emergency response guides
      AutoNews Now: Cadillac's electric Celestiq teased at CES
    • First Shift: GM said to be considering electric Corvette crossover
      First Shift: Subaru to slow output due to microchip shortage
      First Shift: Trump administration delays increased fuel-efficiency fines
      First Shift: Ford, NADA rethink political donations in wake of Capitol siege
    • N.J. dealer helps position peers for ‘electric revolution’
      DCH Millburn Audi
      'Finding the diamond in the rough': How 2020's No. 1 dealership retains talent
      Don Johnson Motors
      'Distinctive culture' cuts turnover, carves career paths at Wis. dealership group
      Why 2020 could be a record year for buy-sells
    • Why the pickup is the auto industry's 'battleground'
      Carlos Ghosn's quest to restore his reputation
      Why Ford must execute to avoid 'deep trouble'
      Why Honda is 'locked and loaded' for 2020
  • EVENTS & AWARDS
    • Events
    • Awards
    • Congress Conversations
    • Retail Forum: NADA
    • Canada Congress
    • Europe Congress Conversations
    • Leading Women Conference
    • Fixed Ops Journal Forum
    • ANE Shift
    • Shift: Mobility at a Crossroads
    • Shift: The Future of Mobility (CES)
    • 100 Leading Women
    • 40 Under 40 Retail
    • All-Stars
    • Best Dealerships To Work For
    • PACE Program
    • Rising Stars
    • Europe Rising Stars
  • JOBS
  • AN Solutions
  • +MORE
    • Leading Women Network
    • Podcasts
    • Webinars
    • In the Driver's Seat
    • Publishing Partners
    • Classifieds
    • Companies on the Move
    • People on the Move
    • Newsletters
    • Contact Us
    • Media Kit
    • RSS Feeds
    • Shift: A Podcast About Mobility
    • Special Reports Podcasts
    • Daily Drive Podcasts
    • AAM
    • Gentex
    • Reputation.com
    • Ricardo
    • Ricardo
    • Allstate: Want more from your F&I?
    • Ally: Navigating the future of automotive retailing
    • Amazon Web Services: Any place, any time, any channel
    • Amazon Web Services: The power of the cloud
    • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
    • Epic Games: Transforming the auto industry with digital assets
    • FTI Consulting: Crisis as a catalyst for change
    • Google: 5 trends shaping the auto industry's approach to a new normal
    • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
    • IHS Markit: Autonomous vehicles: Automotive and transportation disruption
    • IHS Markit: COVID-19: The future mobility delusion
    • IHS Markit: The battery electric vehicle (BEV)
    • Level5: 2020 Automotive E-Commerce Report
    • Naked Lime: Bring social reputation together as part of big-picture marketing
    • Wells Fargo Auto: Switching gears from LIBOR to SOFR
    • Ally: Do It Right
    • DealerSocket
    • Deloitte: Cyber everywhere: Preparing for automotive safety in the face of cyber threats
    • Facebook: The road to a zero-friction future
    • Guide To Economic Development
    • PayPal Credit: How consumer financing helps drive sales for online auto parts retailers
MENU
Breadcrumb
  1. Home
  2. Used Cars
June 15, 2020 12:00 AM

Used wholesale prices up — now what?

David Muller
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    In May, as retailers struggled to recover from the pandemic, Ron Marhofer Auto Family sold a record 861 used vehicles. The group in Ohio had snatched up inventory when prices plunged in March and April.

    "So we were very happy," President Chris Marhofer said. "But now that we're trying to stock up inventory, fill the lots back up, we're finding quite a bit different scenario at the auction."

    Marhofer: New auction scenario

    Dealers throughout the U.S. have seen wholesale prices come roaring back in May and June. Prices tumbled by double digits in April as retail activity fell off dramatically amid store closures and stay-at-home orders. Now that dealerships are reopening — but not many vehicles are being returned to auction — the market has overcorrected.

    Wholesale prices rose 16 percent over seven weeks, according to J.D. Power, which said that for the week ending June 7, wholesale values were 4 percent above the pre-virus forecast.

    According to Cox Automotive, wholesale prices rose 2.1 percent for the week of June 1, while retail prices climbed 0.5 percent, squeezing margins for dealers. As of June 6, wholesale prices were down just 0.6 percent from the beginning of the year, while retail prices were off 1.1 percent.

    "So the big disconnect between retail and wholesale prices is gone," Cox Automotive Chief Economist Jonathan Smoke said in a market update last week.

    The used-vehicle market is reflecting, in part, the tight supply of new vehicles, especially pickups, after manufacturers lost about two months of production in North America. That shortage has sent more new-truck shoppers picking from the used-vehicle lot, tilting the balance of supply and demand.

    Prime Automotive Group in Massachusetts has about 3,200 used vehicles in stock, some 500 fewer than it typically has, said Nasir Uddin, vice president of pre-owned vehicle operations. "Everybody's struggling to get cars," he said.

    Staffing shortages

    At the same time, the two major auction companies are still trying to get back up to capacity while running online-only sales. Manheim furloughed some 9,000 workers in May, and ADESA parent KAR Global furloughed about 11,000 people this spring, although both companies have since been calling back hundreds of employees.

    "We still got this bottleneck that's happening, where the auctions are not back to full staff," said Laura Wehunt, vice president of vehicle valuations at Black Book. This means vehicles are sometimes not getting checked in, reconditioned and posted for sale as quickly as they normally would, she said. "What's there is selling and selling for really strong money," Wehunt added. "The market has bounced back well."

    Hundreds of thousands of excess vehicles are expected to continue coming back to the wholesale market from beleaguered rental companies, as well as by way of deferred leases and repossessions. In May, J.D. Power estimated there were an additional 865,000 deferred used-vehicle returns that would come back to the wholesale side over the next several months.

    With the excess vehicles coming back, unemployment still high and federal stimulus set to expire at the end of July, Black Book sees a "negative perfect storm" brewing for wholesale values, said Alex Yurchenko, Black Book's senior vice president of data science.

    Prices may be at a high point now, but Black Book expects a decline soon, falling to 15 percent below pre-COVID-19 projections this summer and fall before recovering next year.

    Brighter scenario

    J.D. Power's decidedly brighter outlook calls for "normal depreciation" for the remainder of the year, said Jonathan Banks, general manager of vehicle valuations. J.D. Power expects wholesale used values will be down 2 to 4 percent at the end of the year, vs. an initial, pre-COVID-19 projection that called for values to be flat to slightly up.

    The research company expects used-vehicle values to remain relatively strong because of low inventory of new vehicles, as well as pent-up demand. Demand has been exceptionally strong over the past three-plus weeks, said Larry Dixon, senior director of valuation services at J.D. Power.

    Used retail sales in parts of the country that have been less affected by the coronavirus have been above pre-virus expectations, Dixon said. And markets that have been more impacted are just now coming back to pre-virus levels of activity, he said.

    "We have pent-up demand in major markets still," Dixon said. And even with excess supply coming back, those cars and trucks should arrive at a time when dealers are sorely in need of inventory, he said.

    In the meantime, dealers may need to be a little more aggressive with trade-in offers or cast wider nets to acquire used cars and trucks. "There's going to be arguably some short-term compression in terms of margins," Dixon said, adding that retail prices aren't likely to rise much.

    Uddin, of Prime Automotive, said he plans to hire two full-time used-vehicle buyers whose sole task will be to monitor various online auctions for used vehicles.

    More immediately, he's focused on smart appraisals and dealing with lean inventory. "We're kind of focused on running with a tight days' supply and focused more on turn rather than going out and paying too much," he said. "Because we know the bubble is going to burst, eventually."

    RECOMMENDED FOR YOU
    CarMax sees longer return policy as its next trend
    Letter
    to the
    Editor

     

     

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    CarMax sees longer return policy as its next trend
    CarMax sees longer return policy as its next trend
    Cox Automotive acquires imaging, fleet-services businesses
    Cox Automotive acquires imaging, fleet-services businesses
    CarMax to spread the word about omnichannel
    CarMax to spread the word about omnichannel
    Fixing their car without denting their budget
    Sponsored Content: Fixing their car without denting their budget
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    See more newsletter options at autonews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Digital Edition
    Automotive News 1-11-2021
    THIS WEEK'S EDITION
    See our archive
    Fixed Ops Journal
    Fixed Ops Journal 12-14-20
    Read the issue
    See our archive
    FINANCE & INSURANCE REPORT: Sign up to get news, ideas and commentary delivered each Wednesday afternoon on how to maximize profits from your F&I products and services.
    Get Free Newsletters

    Sign up and get the best of Automotive News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    Subscribe Now
    Connect With Us
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter

    Our mission

    The Automotive News mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in North America.

    AN-LOGO-BLUE
    Contact Us

    1155 Gratiot Avenue
    Detroit, Michigan
    48207-2997

    (877) 812-1584

    Email us

    Automotive News
    ISSN 0005-1551 (print)
    ISSN 1557-7686 (online)

    Fixed Ops Journal
    ISSN 2576-1064 (print)
    ISSN 2576-1072 (online)

    Resources
    • About us
    • Contact Us
    • Media Kit
    • Subscribe
    • Manage your account
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • NEWS
      • Dealers
        • Access F&I
        • Fixed Ops Journal
        • Marketing
        • Used Cars
        • Retail Technology
        • Sales
        • Best Practices
        • Dealership Buy/Sell
        • NADA
        • NADA Show
      • Automakers & Suppliers
        • Automakers
        • Manufacturing
        • Suppliers
        • Regulations & Safety
        • Executives
        • Talk From The Top
        • Leading Women Network
        • Guide to Economic Development
        • PACE Awards
        • Management Briefing Seminars
        • World Congress
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls-Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Fiat Chrysler
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Ferrari
          • Fiat
          • Jeep
          • Maserati
          • Ram
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
          • Holden
        • Honda
          • Acura
        • Hyundai
          • Genesis
          • Kia
        • Mazda
        • McLaren
        • Mitsubishi
        • Nissan
          • Infiniti
        • PSA
          • Citroen
          • Opel
          • Peugeot
        • Renault
        • Subaru
        • Suzuki
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
          • Seat
          • Skoda
        • Volvo
        • (Discontinued Brands)
      • Cars & Concepts
        • Virtual reveals (Sponsored)
          • GENESIS: 2021 GV80
          • KIA: 2021 K5
          • LEXUS: 2021 IS
          • NISSAN: 2021 Rogue
          • TOYOTA: 2021 Venza and 2021 Sienna
        • Auto Shows
          • Detroit Auto Show
          • New York Auto Show
          • Los Angeles Auto Show
          • Chicago Auto Show
          • Geneva Auto Show
          • Paris Auto Show
          • Frankfurt Auto Show
          • Toronto Auto Show
          • Tokyo Auto Show
          • Shanghai Auto Show
          • Beijing Auto Show
        • Future Product Pipeline
        • Photo Galleries
        • Car Cutaways
        • Design
      • Coronavirus Coverage
      • China
      • Shift
      • Mobility Report
      • Special Reports
      • Digital Edition Archive
      • This Week's Issue
    • OPINION
      • Blogs
      • Cartoons
      • Keith Crain
      • Automotive Views with Jason Stein
      • Columnists
      • China Commentary
      • Editorials
      • Letters to the Editor
      • Send us a Letter
    • DATA CENTER
    • VIDEO
      • AutoNews Now
      • First Shift
      • Special Video Reports
      • Weekend Drive
    • EVENTS & AWARDS
      • Events
        • Congress Conversations
        • Retail Forum: NADA
        • Canada Congress
        • Europe Congress Conversations
        • Leading Women Conference
        • Fixed Ops Journal Forum
        • ANE Shift
        • Shift: Mobility at a Crossroads
        • Shift: The Future of Mobility (CES)
      • Awards
        • 100 Leading Women
        • 40 Under 40 Retail
        • All-Stars
        • Best Dealerships To Work For
        • PACE Program
        • Rising Stars
        • Europe Rising Stars
    • JOBS
    • AN Solutions
    • +MORE
      • Leading Women Network
      • Podcasts
        • Shift: A Podcast About Mobility
        • Special Reports Podcasts
        • Daily Drive Podcasts
      • Webinars
      • In the Driver's Seat
        • AAM
        • Gentex
        • Reputation.com
        • Ricardo
        • Ricardo
      • Publishing Partners
        • Allstate: Want more from your F&I?
        • Ally: Navigating the future of automotive retailing
        • Amazon Web Services: Any place, any time, any channel
        • Amazon Web Services: The power of the cloud
        • Amazon Web Services: Universal translator: Harnessing sensor data to build better automotive software
        • Epic Games: Transforming the auto industry with digital assets
        • FTI Consulting: Crisis as a catalyst for change
        • Google: 5 trends shaping the auto industry's approach to a new normal
        • IHS Markit: Automotive loyalty in the wake of the COVID-19 recession
        • IHS Markit: Autonomous vehicles: Automotive and transportation disruption
        • IHS Markit: COVID-19: The future mobility delusion
        • IHS Markit: The battery electric vehicle (BEV)
        • Level5: 2020 Automotive E-Commerce Report
        • Naked Lime: Bring social reputation together as part of big-picture marketing
        • Wells Fargo Auto: Switching gears from LIBOR to SOFR
        • Ally: Do It Right
        • DealerSocket
        • Deloitte: Cyber everywhere: Preparing for automotive safety in the face of cyber threats
        • Facebook: The road to a zero-friction future
        • Guide To Economic Development
        • PayPal Credit: How consumer financing helps drive sales for online auto parts retailers
      • Classifieds
      • Companies on the Move
      • People on the Move
      • Newsletters
      • Contact Us
      • Media Kit
      • RSS Feeds