Wholesale used vehicle prices in November registered a modest increase, following the most dramatic decline ever in October. Kontos continues:
Moreover, proportionately more trucks were sold in November than in other months this year, as dealers capitalized on bargain-basement prices for these units, especially with gasoline prices dropping dramatically in recent weeks. In addition, it is important to note that dealer consignment volumes were lacking at wholesale auctions in November. Dealers tend to sell older, lower-priced units at auction, so the absence of such units tends to result in higher average prices.
For these reasons, it is important to focus on price trends in the individual vehicle model class and seller-type segments to better assess market conditions (please see "Details" below). The picture that emerges when analyzing all these details is that the market in November continued to be nearly as weak as October, although weekly trends (minus the holiday week) indicate that the worst may have been over in late-October/early November around the time of the election.
Retail sales of used vehicles improved somewhat from October, but it was still the worst November of the decade. Credit conditions and lack of consumer confidence continue to stifle sales. The relatively brighter spots we cited last month for older, rougher units, particularly those retailed by buy-here-pay-here dealers, along with the big trucks mentioned above, continued to hold up better than the rest of the market.
Conversion rates (units sold as a percent of units offered) at auction improved modestly, but inflows exceeded outflows at auction and inventories continued to grow. As these units are released into the market over the coming months, they will continue to put downward pressure on prices.