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In a notable development for the automobile industry, wholesale used-vehicle prices surged by 2.8% in July, showcasing the sector’s adaptability amidst evolving market conditions.
This significant increase, reported by the Manheim Used Vehicle Value Index (MUVVI), marks a reversal from previous trends and highlights a burgeoning recovery in the used-vehicle market.
July’s price jump defies annual declines
The latest MUVVI data reveals a July index rise to 201.6, despite a 4.8% year-over-year decline.
This month-over-month growth indicates a positive shift in market dynamics and suggests that the used-vehicle sector is gaining traction after a period of instability.
Jeremy Robb, Senior Director of Economic and Industry Insights at Cox Automotive, notes that this uptick is reflective of improved wholesale values, likely driven by increased sales conversions and reduced declines in vehicle values.
Robb attributes the rebound to a variety of factors, including lower lease maturities and constrained supply in key vehicle categories.
“Wholesale value declines slowed in late June, and this trend continued into July, resulting in appreciation over the month,” Robb explained.
This gradual stabilization underscores the sector’s resilience and potential for further growth.
Recent data from the Manheim Market Report (MMR) indicates a series of weekly gains, challenging traditional value fluctuation trends.
The Three-Year-Old Index saw a 1.1% increase over four weeks, surpassing historical averages.
Segment-specific observations reveal varied price adjustments across different vehicle types.
While year-over-year declines persist, the rate of these declines has significantly slowed, with midsize and compact cars experiencing notable month-over-month gains.
Retail used-vehicle sales rise
Retail used-vehicle sales rose by an estimated 5% in July compared to June, although they fell 2% year-on-year.
The average retail listing price for a used-vehicle decreased by 0.5% over the past month.
Conversely, new-vehicle sales dropped by 2.0% year-over-year and 3.0% from June, with the seasonally adjusted annual rate (SAAR) for July at 15.8 million, slightly higher than June’s 15.2 million.
Fleet sales experienced a 14.0% year-on-year decline in July. However, new retail sales are projected to increase by 1.6% year-over-year, with a predicted retail SAAR of 13.1 million units.
Rental risk and consumer sentiment
Rental risk prices and mileage displayed mixed trends in July, with rental risk unit prices down 0.6% year-on-year.
Average mileage for rental risk units fell by 3.0% from the previous year but rose by 10.3% since June.
Consumer confidence also showed signs of improvement, with the Conference Board Consumer Confidence Index increasing by 2.6% due to favorable future expectations.
However, plans to purchase a vehicle within the next six months dropped to their lowest level in nine months, and consumer sentiment according to the University of Michigan fell by 2.6% in June and 7.1% year-on-year.
The substantial rise in wholesale used-vehicle prices in July signals a resilient and adaptable market, despite ongoing challenges.
The interplay of sector-specific trends, consumer sentiment, and broader economic indicators provides a comprehensive view of the current automotive landscape, offering valuable insights for industry stakeholders navigating this dynamic environment.
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