Serves the Commercial Small Fleet Market of 10 – 50 Vehicles

Full-Size SUVs Down, Compacts Up At Auction

May 12, 2005

This is commentary on the current used vehicle market conditions and outlook from Tom Kontos, chief economist for wholesale vehicle auction house ADESA:The sellers’ market continued unabated in April at both the wholesale and retail levels, as strong retail demand and the shortfall in off-lease volume drove average auction prices up 4.8 percent on a year-over-year basis. Overall average prices in April remained virtually flat (down 0.6 percent) relative to March. However, this is partially due to a decline in manufacturers’ program (rental) units believed to be a temporary result of strong travel demand during the Spring Break season. Also, full-size SUV prices continued to soften, concurrent with new vehicle sales declines--and resulting rises in inventory levels and incentives--for this model class.For the tenth month in a row, compact cars had the strongest year-over-year price gains (17.8 percent), and full-size SUVs had the sharpest year-over-year price declines (-4.5 percent), in part due to high gas prices.The ADESA Auction Inventory Index recovered quite a bit in April, rising from 78.3 to 94.6 during the month. The index remains down 2.5 percent from its year-ago level of 97.1. ADESA Analytical Services estimates this represents approximately 26 days of auction sales -- up from 21 last month. The rising inventories may mean that price increases in May will be more modest.The ADESA Auction Dealer Optimism Index registered another significant gain (2.5 percent pts) in April. The April index shows that dealers purchased a higher percentage of vehicles offered for sale by other dealers at ADESA auctions than they did during the same period in the prior year. This is an indication that dealers are still hankering for the vehicles they desire to serve their retail markets. And when those vehicles are not available in the manufacturer or fleet/lease lanes at auction or online, they are finding them in the dealer consignment lanes.
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