Wholesale Prices Up in August, but Kontos Still Sees them Dropping Later

Tom Kontos Executive Vice President & Chief Economist ADESA Analytical Services Wholesale prices may have reversed course and increased in August, but Kontos still sees them declining later; Prices increased both sequentially and annually in August – driven by strong retail sales and decline in new vehicle incentives; Growing wholesale volumes could very well keep […]

Kontos Kommentary – August 2013

August 2013 Kontos Kommentary

 

Where Are Used Car Prices Headed and What Does that Mean for Dealer Profits?

Used car prices have been fluctuating this year in wholesale and retail transactions. Skyrocketing prices that occurred in the first half of 2011 have been bobbing up and down since that time.

What are the forecasts for the rest of this year, along with other metrics that shape remarketing profits?

Supply is increasing, and there’s debate over whether that means prices will be strengthened or weakened. Supply growth is coming from off-lease vehicles, rental return, commercial fleet lease, and more aggressive lending.

There’s differing forecasts coming from remarketing experts.

Here’s what expert are saying, along with a few trends to track as the year progresses…..

 

Leasing Residual Value Changes – Sept/Oct 2013

  • ALG’s edition-over-edition changes for Sept/Oct 2013 show total decline of 1.7 percentage points in 36-month term
  • Industry-level supply brings values down modestly for all segments
  • ALG made major downward adjust to electric vehicle models, which affects vehicles in Microcar, Subcompact, Compact, and Compact MPV segments