Issue Date: Car Dealer Insider Apr 15, 2012, Posted On: 5/1/2012
Trend Spotting
Wholesale used vehicle prices rose at a greater than seasonal pace in March in contrast to the mild year-over-year softening seen in January and February. According to Tom Kontos of ADESA Analytical Services, this reflects continued tight supply and strong retail demand. Average auction prices climbed above $10,000 for the first time since last June and more than matched last year's March/April Spring tax season peak. According to ADESA Analytical Services' monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in March averaged $10,612 - up 7.5% compared to February and up 0.6% versus March 2011. The impact of high gas prices was more subdued this month after wholesale prices adjusted to rising fuel prices more significantly in February (generally up for cars and down for trucks). Manufacturers registered a 6.1% month-over-month price increase and an 18.8% year-over-year rise, reflecting continued tight supplies of late-model used vehicles. Fleet/lease consignors experienced a 7.5% sequential price increase and a 3.5% annual increase. Dealer consignors saw a 7.7% average price increase versus February and an 8.5% uptick versus March 2011.
Based on data from CNW Marketing/Research, retail used vehicle sales in March were up 5.4% year-over-year for franchised dealers but down 3.2% for independent dealers, possibly reflecting better used vehicle shopper traffic and sales at franchised dealerships as a complement to fairly strong new vehicle sales during the month. On a month-over-month basis, retail used vehicle sales were up by over a third for both groups. Certified used vehicle sales in March were at record levels - up 16.8% versus February and up 7.7% versus prior year.
Warranty expenses in the automotive industry are getting back to levels they last saw in 2008, after massive sales-related declines in 2009 and 2010. That should be good news for franchised dealers. Eric Arnum reports in Warranty Week that overall, it looks like 2011 was a year spent getting back to normal. Sales began to grow again, and so did warranty costs, but not as swiftly. OEMs continued to reduce their warranty costs, but then Ford changed the trend when it added in its product recalls
