Tom Webb: Regarding The 2012 Used Car Market Report

My colleagues and I at Manheim Consulting have recently completed the 2012 Used Car Market Report, our annual compendium of used vehicle industry analyses and trends.

The report includes overall assessments of the automotive industry and the auto remarketing industry and features sections devoted to dealers, rental, leasing, repossessions, and salvage. As always, it provides commentary on the performance of the commercial and government fleet markets as well.

Following are short excerpts from the 17th annual UCMR of special importance to fleet managers:

New vehicle purchases by commercial fleets rose sixteen percent in 2011 to more than 531,000 units. Although fleets bought more vehicles last year than in 2010, annual demand will remain below pre-2008 levels until business activity requires an increase in vehicles in operation.
Government fleets acquired only 214,500 units in 2011, down one percent from the previous year, and well off the peak of 313,000 units acquired in 2007. Continued mandates to reduce fleet costs likely will keep government fleet demand weak in 2012.

Businesses and individual owner/operators purchased more than 270,000 medium and heavy-duty trucks, up more than thirty-nine percent from 2010.
Since 2008, fleet managers have responded to tighter budgets by reducing units in service, adapting vehicle selector lists to more closely match driver requirements, using telematics to optimize fuel consumption, and, in some cases, keeping vehicles in service up to 20,000 more miles over historical norms.
Budget constraints again skewed purchases in favor of smaller vehicles and engines in 2011. The typical commercial fleet today has a higher percentage of compact and midsize cars, fewer sport utility vehicles, and minivans often doing the work previously performed by larger and more expensive commercial vans.
The average end-of-service midsize fleet car sold at auctions in 2011 had 72,000 miles, only slightly less than the 73,100 miles in 2010, but up from 65,000 miles in 2009. The average mileage of vans and pickup trucks coming out of fleets remained above 100,000 miles, as it has for years.
Mileage- and seasonally adjusted auction prices for end-of-service midsize cars and pickup trucks reached an all-time high in April 2011, exceeding the previous peak reached in the first half of 2010. Prices for fleet vehicles moderated immediately after that, but then accelerated again in November and December.

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.