What follows is Tom Kontos' and ADESA Analytical Services' monthly analysis of the current used vehicle market conditions and outlook. 

Average wholesale used vehicle prices in April lost some of the momentum they gained in the previous five months, staying essentially flat with their March levels and remaining modestly down on a year-over-year basis. Retail demand remained strong, as franchised and independent dealers registered month-over-month and year-over year gains in used vehicle sales. Incoming auction industry supplies, as well as units in inventory, diminished in April. One would have expected lower wholesale supply and improving retail demand to have resulted in stronger wholesale prices in April, but dealers are being highly selective as limited access to capital and concerns about bankruptcy at both the manufacturer and dealer levels impose a conservative approach to used vehicle inventory management. More specifically, many dealers are limiting their days-supply of used vehicles by keeping fewer units in inventory and turning them quicker, often to satisfy existing customer requests. 

On top of this, auction sales by manufacturers made up a smaller proportion of total auction sales in April. This biased average prices down somewhat, since manufacturers' vehicles tend to be the youngest, most expensive units with the highest levels of reconditioning. 

This hiatus in wholesale used vehicle price growth is a welcome respite for dealers looking to maintain gross margins and used vehicle sales in tough economic times and allows used vehicles to remain a relative bargain for consumers who could afford to buy a new vehicle. But the continued prospect of a leveling in supply and steady to growing demand would indicate that wholesale prices will resume their firming pattern in the months ahead. 



According to ADESA Analytical Services' monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in April averaged $9,843-a 0.4 percent decrease from March and down 1.6 percent from April 2008. 

As we enter the months during which gasoline prices made their rapid run-up to $4 levels last year, comparable year-ago prices for SUVs and pickups are so low that these segments will show large year-over-year price gains.  For example, average prices for full-size SUVs were 10.2 percent higher in April than in April 2008, when gasoline had reached a national average price of $3.60 per gallon. Conversely, prices for compact cars will begin to show sizeable year-over-year declines, as demand last year for more fuel-efficient vehicles was elevated. Thus, average prices for compact cars in April were down 12 percent year-over-year. 

April average prices for vehicles sold in manufacturer sales were up 0.8 percent year-over-year, while fleet/lease sales prices were down 3.6 percent and dealer consignment sales prices were down 2.7 percent. Auction industry sales volumes in April fell by approximately 25 percent compared to March. ADESA Analytical Services estimates that auction industry inventory levels stood at approximately 41 days at the end of April-much lower than the 73 days around 2008 year-end and near-parity with the 40 days at the end of April 2008. The working down of inventories will continue to put upward pressure on prices in light of still-strong demand. 

Based on data from CNW Marketing/Research, retail used vehicle sales in April were up on a year-over-year basis by 10 percent for franchised dealers, 3.4 percent for independent dealers, and 6.8 percent overall. Certified used vehicle sales in April were down sequentially (by 1.5 percent) and year-over-year (by 14.9 percent) according to Autodata. Despite the drop in certified pre-owned sales, franchised dealers sold greater than 50 percent more used vehicles in April (1,245,760 according to CNW) than they did new vehicles (819,817 according to Automotive News).