Manheim Used Vehicle Value Index Continues Record Upward Swing

Manheim Used Vehicle Value Index Continues Record Upward Swing
End-of-service Fleet Units Show "Exceptional Pricing Strength"

For fleet managers and others in the remarketing industry, things continue to look up for 2010. Wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) rose again in May, with the Manheim Used Vehicle Value Index reaching an all-time high of 121.0 (January 1995 = 100), representing a 10.9 percent increase from a year ago. Click here to view Used Vehicle Value graph.

The Index increase was driven by units in the lower and middle price tiers, not to mention the lowest levels of new vehicle inventory in more than 35 years of recordkeeping. These low levels are an indicator of historic manufacturer restructurings – a movement away from pushing inventory onto dealers. Click here to view Price Changes for Selected Market Classes graph.

The positive impact on used vehicle values is hard to overstate, as dealers are able to:

Secure higher new vehicle transaction prices.
Keep their focus on selling used as well as new vehicles.
Free up capital that would otherwise have been used to floor new vehicle inventory.
Benefit from increased retail demand due to the improved labor market and increased credit availability.

This is, of course, welcome news for fleet managers, who are seeing increased interest in their vehicles at auction as dealers are confronted with a diminished supply of low-mileage used cars in the auction lanes.

The decrease in wholesale supply is due to several factors and is likely to continue. In 2008 and 2009, there was a significant surge in the number of end-of-service fleet units sold at auction, which was reflective of past sales into fleet and other factors. This year, there was no surge in the availability of end-of-service units. High rental risk volumes and low numbers of rental program units also led to an increased demand for high-quality end-of-service units.

All that is to say that this is an opportune time to be in the fleet business. In fact, you may be wishing that you had more cars to sell.

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.