According to the Manheim used vehicle price index, prices last month rose by 20% over December 2008 to 117.5. In December of 2008, the index stood at 98.0.
The organization’s chief economist, Tom Webb, said that last summer’s Cash for Clunkers program drove prices for late-model used vehicles higher by removing many 2009 model vehicles from the market as new 2010 models were arriving.
Webb said, That carryover inventory normally has a very depressing effect on used-vehicle values. During his monthly conference call with automotive journalists and analysts, Webb went on to say that convulsions in the financial markets, combined with volatile oil prices and decreased demand from rental car companies contributed to the volatility in used vehicle prices over the past few years.
Webb said, As those go away, I would expect more stability.
He also said that last year’s 5.1% increase in wholesale pricing was the biggest increase in the index’s history.
Manheim’s monthly used vehicle price index was begun in 1995 and tracks changes in used vehicle prices. The index originally assigned a baseline of 100 against which all subsequent indexes have been compared. The index is adjusted on a monthly basis for mileage, time of year and model mix across the wholesale used vehicle market.
New data released by ADESA, Incorporated sets the average wholesale price for used vehicles in December 2009 at $9,939. That figure represents a 10.2% increase over average prices seen in December of 2008. It is also a 3.5% increase over the average used vehicle price in November 2009.
Webb said inventories of off-lease autos and repossessions were up in 2009 but predicted that they will decline in 2010. He also predicts the decline will continue over the next few years.
He also cited data released by CNW Marketing Research that showed about a 3% decrease in used vehicle sales to approximately 35 million units in 2009. Webb predicts about a 5% or 6% turnaround in those numbers in 2010.
Webb said that rental fleet sales dropped by about 1 million units in 2009 “ down from approximately 1.5 million units in 2008. In 2005 and 2006, rental fleet sales were estimated at about 2 million units. Detroit’s Big Three automakers saw their shares of rental fleet sales decline to just over 60% in 2009. In 2008, Ford Motor Company, Chrysler Group and General Motors Company accounted for a combined 70% of rental fleet sales.
Webb predicts a rebound in the rental fleet business. The rental and fleet business will pick up, but I don’t expect it to return to the level it once was, he said.