Used Market Update: August 20, 2020
Wholesale auction sales of vehicles up to 8 years old for the week ending August 16 were unchanged vs. the previous week (week ending August 9) with sales again reaching an estimated 95,000. While sale volumes remain healthy, sales over the past two weeks have been an average of 7% less than our pre-virus forecast for each respective period.
Weekly Wholesale Auction Sales (thousands)
Segment-level auction sales on the mainstream side of the market increased by an average of 3%. Large car sales grew the most, increasing by an average of 11% for the week. Following behind, midsize pickup and small car segment sales increased by 7% and 8%, respectively. On the opposite end of the spectrum, large and midsize SUVs experienced sales declines of 4% and 5%. Remaining mainstream segments experienced flat to slightly positive sales increases for the period. Premium segment sales declined by an average of 4% for the week. However, while nearly all premium segments saw declines in sales volumes, large premium sales increased by 18% and small premium car sales grew by a slight 1%. Sales results for the remaining premium segments were all negative week-over-week, with sales down between -4% for midsize premium SUV to -13% for small premium SUV.
Wholesale Auction Prices Flat Ending 16 Consecutive Weeks of Growth
After several weeks of slowing price appreciation, wholesale auction prices leveled off the week ending August 16. Prices last week were essentially flat vs. the week ending August 9, down a slight 0.1%, ending 16 consecutive weeks of price increases. However, prices have grown 36% since their trough in April, and remain 15% higher than at the beginning of March.
Weekly Wholesale Auction Price Index (Mar 1 = 100)
Wholesale prices for mainstream segments slipped by a slight 0.2% the week ending August 16 when compared to the prior week. Midsize pickup prices bucked the overall sector trend increasing by an average of 0.9%. On the opposite end of the spectrum, compact, midsize, and large car prices declined the most, with prices falling between 0.5% and 0.9%. Remaining mainstream segment prices were flat to down slightly. Premium prices once again performed slightly better than their mainstream counterparts. On average, premium segment prices increased by 0.9%, which was driven by growth across the premium side of the market. Prices for premium segments improved by 0.4% for midsize premium SUV to 2.2% for midsize premium cars.
Wholesale prices remain strong, but the used market is slowing. Prices are expected to continue to level off in August as pent-up demand wanes and pandemic-related macro-economic headwinds increase. By year's end, prices are expected to be slightly greater than pre-virus levels. It is important to note, however, that while the outlook is relatively optimistic, there remains a great deal of uncertainty surrounding the impact of new virus outbreaks, the potential for another round of federal stimulus, and overall employment conditions. Given these unknowns, a heightened degree of market volatility should be expected.
Used Vehicle Retail Sales Performance Flat While Prices Continued to Rise
Sales of used vehicles at franchised dealers were 3% below pre-virus forecast for the week ending August 16. The result was in-line with the prior week. However, used retail prices continued to rise, increasing 0.8 percentage points week-over-week in the week ending August 16. Prices are now 7.4% higher than the index baseline level from March 1.