Wholesale Used-Vehicle Prices Decline 3% March to April
All prices in key vehicle type categories were down year over year in April 2023.
Graphic: Cox Automotive
Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) decreased 3% in April from March, while the Manheim Used Vehicle Value Index (MUVVI) dropped to 230.8, down 4.4% from a year ago.
April’s decrease was impacted by the seasonal adjustment. The non-adjusted price change in April increased by 0.1% compared to March, moving the unadjusted average price down 5.6% year over year.
“While values increased 8.6% through the first quarter from December, the market has reversed course in April, with our monthly figures showing a month-over-month decline for the first time in 2023,” said Chris Frey, senior manager of economic and industry insights for Cox Automotive. “Values in April also continue to be lower year over year. We’ve experienced eight straight months of year-over-year declines, averaging 8.3%, and it’s likely not over yet. During the financial crisis, we had 16 months of annualized declines, averaging 5.8%. Though I’m not predicting doom, we’ve surely started a second, and more rapid, decent off the pandemic peak of January 2022.”
In April, Manheim Market Report (MMR) values saw declines that accelerated as the month progressed. Over the last four weeks, the Three-Year-Old Index declined an aggregate 0.6%. In April, daily MMR Retention, which is the average difference in price relative to the current MMR, averaged 98.7%, meaning market prices were below MMR values. The average daily sales conversion rate declined to 60.9%, which was below normal for the time of year.
For context, the daily sales conversion rate averaged 63.6% in April 2019. Conditions have shifted to favoring buyers; but with tight supply, the market is close to a balance between buyers and sellers.
Used-vehicle Retail Sales Declined Year Over Year in April
Assessing retail vehicle sales based on observed changes in advertised units tracked by vAuto, Cox estimates that used-vehicle retail sales declined by 8% in April from March and saw the year-over-year comparison with 2022 deteriorate. Used retail sales are estimated to be down 8% YOY in April. The average retail listing price for a used vehicle has been trending higher.
Four Experts Dissect Used Vehicle Market
Using estimates of used retail days’ supply based on vAuto data, an initial assessment indicates April ended at 42 days’ supply, unchanged from 42 days at the end of March and eight days lower than how April 2022 ended at 50 days.
Leveraging Manheim sales and inventory data, wholesale supply is estimated to have finished April at 25 days, up two days from the end of March and down one day from April 2022’s estimate of 26 days.
April’s total new-light-vehicle sales were up 9% year over year, with one less selling day than April 2022. By volume, April new-vehicle sales were down 1.5% from March. The April sales pace, or seasonally adjusted annual rate (SAAR), came in at 15.9 million, an increase of 11.4% from last year’s 14.3 million and up 7.2% from March’s revised 14.8 million pace.
Combined sales into large rental, commercial, and government fleets increased 39% year over year in April:
- Sales into rental fleets were up 64% year over year
- Sales into commercial fleets were up 13%
- Sales into government fleets were up 54%
Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 6.1%, leading to an estimated retail SAAR of 13.4 million, up 1.3 million from last year’s pace, and up 0.5 million from last month’s 12.9 million pace.
The fleet market share of 17.5% was a 2.2% gain compared to last year’s share of 15.3% but was a 0.4% decrease from last month’s estimated 17.9% market share.
Rental Risk Prices and Mileage See Large Moves in April
The average price for rental risk units sold at auction in April was up 5.8% year over year. Rental risk prices were up 3.1% compared to March. Average mileage for rental risk units in April (at 59,600 miles) was down 7.4% compared to a year ago and down 8% from March.
Measures of Consumer Confidence Mixed in April
- The Conference Board Consumer Confidence Index declined by 2.6% in April, as views of the present situation increased by 1.5% but future expectations declined by 8%. Consumer confidence was down 6.7% year over year. Plans to purchase a vehicle in the next six months declined to the lowest level since November 2021.
- The confidence index did not fall as much during the pandemic as the sentiment index from the University of Michigan, and the two series diverged again in April. The Michigan index increased 2.4% in April but was down 2.6% year over year. Views of current economic conditions and expectations improved in April. Consumers’ views of buying conditions for vehicles improved slightly in April and remained much better than a year ago.
- The daily index of consumer sentiment from Morning Consult also measured improving sentiment in April, increasing by 4.8%. Consumer attitudes have been sensitive to the price of gasoline for over a year now. Gas prices increased early in April but then declined in the second half of the month.
According to AAA, the national average price for unleaded gas increased 3% in April to $3.61 per gallon as of April 30, down 14% year over year.
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