Used Market Update: July 30, 2020
Wholesale auction sales remain consistent, sales flat week-over-week. Wholesale auction sales of vehicles up to 8 years old for the week ending July 26 were unchanged from the level reached the previous week (week ending July 19) with sales again reaching an estimated 102,000. This is the second consecutive week that sales have been greater than 100,000 units, however, weekly sales totals were 2% below J.D. Power’s pre-virus forecast of 104,000 units for the period.
Weekly Wholesale Auction Sales (thousands)
Segment-level auction sales on the mainstream side of the market increased by an average of 7%. Small car sales grew 13%, followed closely by a collective 10% increase in the large SUV, midsize car and midsize pickup segments. Remaining mainstream segment sales were flat to up slightly. Premium segment sales were down by an average of 3% for the week. The only premium segment to experience an increase was compact premium SUV, as sales for the segment increased 8%. Remaining premium segment sales fell from 5% (large premium car) to 24% (small premium car).
Wholesale Auction Prices Increase, However, Rate of Growth Slows Again
Wholesale auction prices improved for the 14th consecutive week, rising 0.8 percentage points for the week ending July 26. The rate of growth continues to slow as last week’s result was the smallest week-over-week increase recorded since prices began their recovery in April. However, prices have grown 33% over the past 14 weeks and are now 13% higher than the beginning of March.
Weekly Wholesale Auction Price Index (Mar 1 = 100)
Wholesale prices for mainstream segments the week ending July 26 increased by an average of 0.6% vs. the prior week. Excepting midsize van, whose prices fell 0.2%, mainstream prices increased from 0.3% (midsize SUV) to 1.3% (compact car). Bucking recent weekly trends, premium vehicle prices were stronger than their mainstream counterparts, increasing by a collective average of nearly 1%. While prices were up across the board, large premium car prices were the strongest, increasing by an average of 1.7%. Remaining premium segment price increases followed the general degree and direction of the overall sector average for the week.
While wholesale prices remain strong, the declining rate of growth week over week indicates a slowing market. Expectations remain that prices will drift lower heading into August as pent-up demand wanes and pandemic-related macro-economic headwinds increase. By year's end, prices are expected to be more or less on par with pre-virus levels. It is important to note, however, that while the outlook is relatively optimistic, there remains a great deal of uncertainty surrounding the effect of new virus outbreaks, the potential for another round of federal stimulus, and overall employment conditions. Given these unknowns, a heightened degree of market volatility should be expected.
Used Vehicle Retail Sales Performance Slowed as Prices Continued to Rise
Sales of used vehicles at franchised dealers were 3% below pre-virus forecast for the week ending July 26. The result reflected a continuation of the slow down observed over the past three weeks. Used retail prices rose once again, increasing 0.7 percentage points for the week ending July 26. Prices are now 4.5% higher than pre-virus levels.