Used Market Update: February 26, 2021
After increasing 1% the week ending Feb. 14, wholesale auction prices continued to rise during the week ending Feb. 21. Prices last week improved 0.4%, which extends the streak of week-over-week price increases in the wholesale marketplace to eight weeks. Wholesale prices are now 5% lower than their peak back in August 2020.
Weekly Wholesale Auction Price Index (Mar 1 = 100)
Wholesale prices for mainstream segments were positive across the board for the week ending Feb. 21. Small car prices were the strongest last week increasing by an average of 1.7%. Increases across other mainstream segments fell within a tight range of 0.4% to 1%. On the premium side of the market results were mixed. For example, midsize and large premium SUV values increased by respective figured of 0.4% and 0.7%, however, remaining premium segment prices declined by a range of 0.3% to 1.6%.
Wholesale Auction Sales Falls to 69,000 Units
Wholesale auction sales of vehicles up to 8 years old reached approximately 69,000 units during the week ending Feb. 21. Last week’s result was less than the recent trend where sales reached the 80,000 to 90,000-unit level. Last week’s result was driven by winter weather events across large portions of the country which ultimately dampened auction sales activity. Looking back to the same period in 2020, sales volume reached approximately 112,000 units. Last week’s result continues to showcase how lean the wholesale marketplace is running, which is helping keep used prices strong.
Weekly Wholesale Auction Sales (000s)
In 2021, used prices are expected to remain near historic levels as pandemic-related macro-economic headwinds remain in place. By year's end, prices in Q4 2021 are expected to be essentially flat with where prices were in Q4 2020 and will remain higher than pre-virus levels. It is important to note, however, that while the outlook remains optimistic, there remains a great deal of uncertainty surrounding the effect of virus outbreaks, vaccine roll out, federal stimulus, employment conditions, new vehicle production constraints, as well as the ongoing semiconductor (microchip) shortage on the new side of the market. Given these unknowns, a heightened degree of market volatility should be expected.