Cox Enterprises Inc.
Jan 9, 2018
ATLANTA, Jan. 9, 2018 /PRNewswire/ -- Used vehicle value pricing continues to soften following last year's active hurricane season. The Manheim Used Vehicle Value Index – a measure of wholesale prices adjusted for mix, mileage and season – came to a reading of 132.0 in December, which was a 5.6 percent increase from a year ago but the lowest level since last August.
"Most gains since August were a result of the replacement demand following the devastation of Hurricanes Harvey and Irma," said Jonathan Smoke, chief economist for Cox Automotive, parent company of Manheim. "Used vehicle values are now returning to pre-storm levels. Underlying vehicle depreciation rates have been accelerating to catch up to where prices would have been without the abnormal demand and scarce supply in both September and October."
Also down at the end of last year were new-car sales, having decreased 5 percent year-over-year compared to December 2016. At 17.1 million units for the year, annual new-vehicle sales slipped for the first time in seven years. December's seasonally adjusted annual rate (SAAR) – down from a record 18.1 million in 2016 – rounded out at 17.8 million, the fourth straight month of over 17 million SAAR and the longest streak of 2017. While trucks and SUVs saw gains in share, cars continued to see sharp declines as sales in December fell more than 17 percent compared to last year.
Cox Automotive estimates used-car sales increased by 4 percent year-over-year in December, with the month's used-car SAAR having increased to 38.9 million units. At 39 million units for last year, used-vehicle sales grew by 1 percent in comparison with 2016.
For used-vehicle pricing trends, all car segments – except for midsize cars – were up from last year, with especially strong increases once again in pickups and vans. Key fourth quarter wholesale price trends for all vehicle segments included:
Rental risk pricing also weakened in December, with the average price for rental risk units sold at auction last month up 0.3 percent over 2016. Rental risk prices were down 2 percent compared to November, and the average mileage for these units at the end of 2017 was 49,700 miles – 15 percent higher than a year ago.
At-A-Glance: The Year Ahead
A strong stock market, high consumer confidence and low unemployment are major factors for continued economic growth in 2018. The tax reform's positive impact on most households' take-home pay – approximately 80 percent – should reinforce consumer spending and help offset the impact of higher interest rates on vehicle loans.
Cox Automotive forecasts combined new- and used-vehicle sales in 2018 to be flat relative to 2017 at approximately 56.2 million. New-car sales this year are expected to be 16.7 million units, down from 17.1 million in 2017, with used-car sales forecast to be 39.5 million, up from 2017. Used-vehicle value pricing overall in 2018 will look like last year – minus the hurricane – and be stable to higher-than-normal in terms of what we normally see relative to inflation. A weak first quarter is predicted, followed by strong second and third quarters.
"Expect pricing weakness for the next few months thanks to depreciation accelerating for most vehicles playing catch up with the abnormal pricing performance in September and October," said Smoke. "As we look ahead into March, we will likely miss the typical 'bounce' in used-vehicle prices as tax refunds will again be delayed as part of the IRS' effort to combat identity fraud but prices should be on firmer footing by April as retail demand kicks into gear."
Visit Manheim's website to access a variety of company publications, reports and white papers.
Manheim® is North America's leading provider of vehicle remarketing services, connecting buyers and sellers to the largest wholesale used vehicle marketplace and most extensive auction network. Through 127 traditional and mobile auction sites and diverse digital channels, the company helps dealer and commercial clients achieve business results by providing innovative end-to-end inventory solutions. Approximately 18,000 employees enable Manheim to register about 8 million used vehicles per year, facilitate transactions representing nearly $57 billion in value and generate annual revenues of $3 billion. Headquartered in Atlanta, Manheim North America is a Cox Automotive™ brand. For more information, visit http://press.manheim.com.
About Cox Automotive
Cox Automotive Inc. is transforming the way the world buys, sells and owns cars with industry-leading digital marketing, financial, retail and wholesale solutions for consumers, dealers, manufacturers and the overall automotive ecosystem worldwide. Committed to open choice and dedicated to strong partnerships, the Cox Automotive family includes Autotrader®, Dealer.com®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital®, RMS Automotive, vAuto®, Xtime® and a host of other brands. The global company has 34,000-plus team members in more than 200 locations and is partner to more than 40,000 auto dealers, as well as most major automobile manufacturers, while engaging U.S. consumer car buyers with the most recognized media brands in the industry. Cox Automotive is a subsidiary of Cox Enterprises Inc., an Atlanta-based company with revenues exceeding $20 billion and approximately 60,000 employees. Cox Enterprises' other major operating subsidiaries include Cox Communications and Cox Media Group. For more information about Cox Automotive, visit www.coxautoinc.com.
For further information: Mark Schirmer, Senior Manager, Public Relations, (734) 883-6346, Mark.Schirmer@coxautoinc.com