Overall wholesale prices of used vehicles declined in May from April levels, although tags of used pickups surged, according to data in the Manheim Used Vehicle Value Index. According to Manheim, the surge in used-vehicle prices was thanks to a combination of modest hikes in wholesale used-vehicle supplies, favorable interest rates and franchise dealers focusing more on used-vehicle business.
It added that readily available retail financing at attractive terms has also allowed dealers to post good profits on the subsequent retail sale of their auction buys.
Ricky Beggs, editorial director at Black Book, remarked that used-vehicle prices usually start to slow down in April, but that trend didn’t occur this year since the harsh winter weather in the first two months of 2014 delayed several spring used-vehicle sales.
This prompted dealers to continue stocking used vehicles throughout April, expecting a sales surge from pent-up demand. The surge, however, only lasted until end of April as average price of 2008-2012 model-year vehicles dropped 0.4 percent in the May 1-June 1, period, according to Black Book data.
On the other hand, the average price of used full-sized pickups surged 0.6 percent in the period while average price used mid-sized pickups – like the Ford Ranger, Dodge Durango and Chevrolet Colorado -- -- jumped 0.5 percent.
According to Beggs, the surge in truck prices was thanks to demand from the housing, service and construction industries as well as to higher transaction prices for new pickups. He remarked higher new transaction price mean more room for differentiation, adding that depreciation is “not as great.” The Manheim index was 124.7 in May, down from 124.9 in April.