Reflecting both the ongoing recovery of wholesale used vehicle prices from last year's depressed levels, and the return to seasonal patterns ADESA Analytical Services anticipated in last month's commentary and our mid-year Pulse report, August wholesale prices were up significantly on a year-over-year basis and down modestly on a month-over-month basis.

Retail sales of used vehicles were relatively flat overall and down modestly for franchised dealers, which was likely due to a bias towards new vehicles in August as a result of Cash for Clunkers. With the end of C4C on August 24, we expect resumption in strong used vehicle demand as witnessed in the months preceding that program. One sign of continued used vehicle market strength is the uptick in certified pre-owned sales in August versus July (please see last paragraph in "Details" below).


According to ADESA Analytical Services' monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in August averaged $9,949 -- a 0.7 percent decrease from July but a 3.9 percent increase from August 2008. Compact car prices staged a bit of a rebound after several months of declines, though they remain well below last year's peak levels when gas prices skyrocketed. Full-size vans and cars registered the highest month-over-month increases, but these segments are relatively low-volume.

All major seller types showed year/year price gains, with average prices for vehicles sold in manufacturer sales up 10.3 percent year-over-year, fleet/lease sales prices up 6 percent and dealer consignment sales prices up 3 percent.

ADESA Analytical Services estimates that auction industry inventory levels stood at a relatively low 33 days at the end of August, which is the same as last month but below the 36 days registered last August. Conversion rates (units sold as a percentage of units offered) remain at levels well above the 60 percent norm, as dealers continue to bid aggressively for available vehicles.

Based on data from CNW Marketing/Research, retail used vehicle sales in August were down on a year-over-year basis by 1.1 percent for franchised dealers, up 1.5 percent for independent dealers and up only 0.1 percent overall. Certified used vehicle sales in August were up 7.3 percent versus July, an increase of almost 10,000 units, although still down by 8.3 percent compared to August 2008. Perhaps this is because some customers who were not able to swing a Cash for Clunkers deal were converted instead to certified pre-owned vehicle buyers.