Early Second-quarter Numbers Show 2010 Continues Its Strong Start . End-of-service Values Remain "Stupid Strong"

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By Tom Webb, Chief Economist for Manheim Consulting and author of "Manheim's 2010 Used Car Market Report."

It is nice to be the bearer of sustained good news for a change. Now four months into 2010, we continue to see a consistent upward trend in used vehicle values.

In fact, the Manheim Used Vehicle Value Index in April reached a record level of 120.7, which represented a 13.2 percent increase from a year ago.

Click here to view Used Vehicle Value Index slide. Fleet managers are feeling the positive shift in the market as a result of a number of factors, including:

• Employment gains driving higher new sales into fleet
• Demand continues to outstrip a diminished supply, resulting in increased value for end-of-service units
• Manufacturers continue to show discipline in retail inventory management and pricing
• Manufacturers pushing more discounts to fleet purchases

Fleet managers would be wise to pay close attention to some fairly significant changes in the wholesale marketplace. Wholesale used vehicle prices have recently gone through a period of unprecedented overall volatility, with large price shifts between market classes and large price shifts between price tiers. Click here to view Price Changes for Selected Market Classes slide.

In April, we saw particular strength in compact pickups and full-size vans, while some mid-sized cars showed relative weakness during the month as a result of competitive pressure from the new vehicle side of the market.

While values for end-of-service units continue to stay strong, fleet managers are realizing it is increasingly important to remarket vehicles at auctions, where they have the ability to maximize profits by reaching bids higher than their asking price. In particular, quality lower-priced units are in short supply and have been attracting strong bidding at auctions. Click here to view Average Auction Price slide.

Tom Webb is chief economist for Manheim Consulting. Contact him at Thomas.webb@manheim.com, follow him via Twitter at www.twitter.com/TomWebb_Manheim and read his blog at www.manheimconsulting.typepad.com.