Vehicle auction price rise this spring less than normal, reports KBB

auction pricesDealers are used to seeing an uptick in vehicle auction prices come spring, but this year, prices stayed relatively flat. Why?

Kelley Blue Book’s Alec Gutierrez said this flatness can be attributed to “mild fuel prices and increased supply,” according to Auto Remarketing news.

In fact, wholesale values increased only 2 percent in the first quarter, said Gutierrez, who is the senior market analyst of  automotive insights at KBB.

Last year, wholesale prices rose by 3 percent during the same period,  and jumped up 6 percent in 2011.

As for the reasons for the downtrend, used supply is finally loosening, which is definitely playing a part in unseasonably low wholesale rates. And the current situation at the gas pumps may be helping, as well.

“Although values have eased as supply has improved due to slight increases in off-lease units in recent months, recently cheaper gas is helping to keep values in check so far this year,” Gutierrez said in April’s Blue Book Used Car Market Report. “Gas prices currently are more than $0.30 per gallon less than they were at this time last year and continue to fall.”

Not only did these factors keep spring wholesale price upticks at bay, they also brought prices down quicker, as prices at auction began to fall as April got underway — “the peak came approximately two weeks earlier this year than in 2013, and more than a month earlier than in 2011,” Gutierrez said.

Overall, used-vehicle values were down in nearly every segment in April, with the average used-vehicle selling approximately 1.7 percent below prices paid at this time last year for similarly aged vehicles, Gutierrez reported.

Interestingly, as gas prices fell, hybrid prices declined the most at auction, with values more than 12 percent below last year’s levels.

“Values of used hybrids have been kept low by cheaper gas prices and attractive finance officers on new hybrid models,” Gutierrez said.

What’s in store for Q2 and beyond?

“Kelley Blue Book believes used-vehicle values likely will decline between 1 to 3 percent in the second quarter, and will continue to drop modestly throughout the rest of 2013,” Gutierrez said.

Gutierrez expects the industry to end the year with much lower auction prices than seen in 2012.

“Due to improving supply conditions at auction, attractive new vehicle finance offers and cheaper gas prices, Kelley Blue Book expects used-car values to remain down year-over-year, likely ending the year 3 to 5 percent below prices paid in 2012,” Gutierrez concluded.

By Sarah Rubenoff, Auto Remarketing

 

 

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