- After consecutive months of double-digit declines, the Manheim
Used Vehicle Value Index (MUVVI) ended June lower again but
performed slightly better than anticipated.
- The slowing price decline and positive signs in demand point to
fewer significant declines in the second half of 2024 and
potentially even some growth.
- Fewer lease maturities are expected to begin affecting
used-vehicle inventory in the second half of the year, negatively
impacting available inventory.
ATLANTA, July 9, 2024
/PRNewswire/ -- The Manheim Used Vehicle Value Index (MUVVI)
declined to 196.1 in June, ending the first half of 2024 down 8.9%
from a year ago.
Wholesale used-vehicle prices (on a mix, mileage, and seasonally
adjusted basis) were down in June compared to May. The seasonal
adjustment to the index mitigated the impact on the month,
resulting in values that declined 0.6% month over month for the
second time in a row. The non-adjusted price in June decreased by
2.2% compared to May, moving the unadjusted average price down
10.0% year over year.
"Wholesale value declines have been stronger than we normally
see for much of the last two months," said Jeremy Robb, senior director of Economic and
Industry Insights at Cox Automotive. "However, even though much of
the industry was feeling the retail sales disruptions caused by the
CDK outages in the latter part of the month, Manheim started to see
wholesale price declines decelerate, ending the month at a
seasonally normal pace. Sales conversion is currently running
several points above the previous three years, including 2021,
indicating that buyer demand is relatively strong despite all the
uncertainty in the market."
June's decline marks another month of a slide that began in 2021
when the MUVVI started trending downward. However, at the midway
point of the year, signs are looking positive for the remainder of
2024.
"We think the decline may be nearing its floor, which should
help stabilize the market through the summer months and rebound in
the back half of the year," said Cox Automotive Chief Economist
Jonathan Smoke. "Between increasing
demand, slowing price declines, and slightly better interest rates,
all of our indicators point to an optimistic outlook for the rest
of the year. We may even see a few months of growth before the end
of 2024."
Manheim Market Report Values Saw Decreases
In June,
Manheim Market Report (MMR) values saw weekly decreases above
long-term average declines, with the first half of the month
showing stronger depreciation while the last week slowed
noticeably. Over the last four weeks, the Three-Year-Old Index
decreased an aggregate of 1.5%, including a decline of only 0.2% in
the last week of the month. Those same four weeks delivered an
average decrease of 0.5% between 2014 and 2019, showing that
depreciation trends are currently running higher than long-term
averages for the year.
Over the month of June, daily MMR Retention, which is the
average difference in price relative to the current MMR, averaged
97.8%, meaning market prices stayed below MMR values again this
month. Against May, valuation models in June moved down a point on
MMR retention. The average daily sales conversion rate rose to
57.4%, a rise over the previous month and higher than is normally
seen at this time of year. For comparison, the daily sales
conversion rate averaged 51.4% in June over the past two
years.
The major market segments all experienced seasonally adjusted
prices that were down year over year in June. Compared to
June 2023, pickups were the only
segment that outperformed the industry, down 8.3% on the year. SUVs
declined by 9.3% year over year, luxury fell 9.9%, midsize cars
were down 11.0%, and compact cars were again the worst-performing
segment, falling by 12.0% against last year.
Compared to the previous month, SUVs show the best results,
rising by 0.3% against May, and compacts fell just 0.4%, less than
the industry average of down 0.6%. Performing worse than the
industry, midsize cars fell by 0.8%, luxury was down 0.9%, and
pickups declined the most against May, falling by 1.4% for the
month.
Seasonally adjusted electric vehicle (EV) values for June were
down 16.6% compared to June 2023,
while non-EVs were down 9.5% for the same period. Compared to May,
seasonally adjusted EV values continued to decline more than the
market overall, falling by 6.5% in June, while non-EVs declined
only 0.3% over the same period.
Diminishing Lease Returns Start to Weigh on Used-Vehicle
Market
Three-year-old vehicles, primarily sourced from lease
returns, have consistently represented the highest volume age group
sold at wholesale. However, the availability of these popular
vehicles is declining. This downturn is expected to accelerate in
July and persist through the rest of the year, negatively impacting
inventory levels at wholesale. Cox Automotive forecasts a 12% drop
in lease maturities for Q3, with a further decline of 17-18% in Q4.
This downward trend will continue, reflecting the reduced share of
lease sales during the pandemic years, and will impact used-vehicle
inventory.
"In the second half of the year, the wholesale marketplace will
start really feeling the impact of lower lease maturities coming
back to the marketplace," Robb said. "This is a pattern that is not
going to go away for the next two years, and we'll likely be
dealing with it through 2026."
Retail Used-Vehicle Sales Decreased in June
Assessing
retail vehicle sales based on observed changes in units tracked by
vAuto, initial estimates indicate that retail used-vehicle sales in
June were down 5% compared to May but up 3% year over year. The
average retail listing price for a used vehicle was down 1% over
the last four weeks.
Using estimates of retail used days' supply based on vAuto data,
an initial assessment indicates June ended at 48 days' supply, up
two days from 46 days at the end of May and down one day from 49
days at the end of June 2023.
New-Vehicle Sales Continue Falling
New-vehicle sales
in June were down 3.4% from last year, and volume declined 7.6%
from May as the industry impact from the CDK outage decreased the
pace of sales from earlier in the month. The June sales pace, or
seasonally adjusted annual rate (SAAR), came in at 15.3 million,
down 0.4 million from last year's pace and down from May's 15.9
million level.
Combined sales into large rental, commercial, and government
fleets decreased 8.7% year over year in June. Including an estimate
for fleet deliveries into dealer and manufacturer channels, the
remaining new retail sales were estimated to be down 0.4% from last
year, leading to an estimated retail SAAR of 12.7 million, lower by
0.2 million from last year's pace and down from May's 13.0 million
level. Fleet share in June was estimated to be 17.1%, down from
last year's 19.6% share.
Rental Risk Prices and Mileage Showed Declines in
June
The average price for rental risk units sold at auction
in June declined 14.8% year over year. Rental risk prices decreased
by 5.3% compared to May. Average mileage for rental risk units in
June (at 49,400 miles) fell significantly against the prior year,
down 12.8% for the month against last year's level. For the month
of June, rental unit average mileage was down 12.5% month over
month.
About Cox Automotive
Cox Automotive is the world's
largest automotive services and technology provider. Fueled by the
largest breadth of first-party data fed by 2.3 billion online
interactions a year, Cox Automotive tailors leading solutions for
car shoppers, automakers, dealers, retailers, lenders, and fleet
owners. The company has 25,000-plus employees on five continents
and a family of trusted brands that includes
Autotrader®, Dealertrack®, Kelley Blue Book®,
Manheim®, NextGear Capital™, and vAuto®. Cox
Automotive is a subsidiary of Cox Enterprises Inc., a privately
owned, Atlanta-based company with
$22 billion in annual revenue. Visit coxautoinc.com or
connect via @CoxAutomotive on
X/Twitter, CoxAutoInc on Facebook,
and Cox-Automotive-Inc on LinkedIn.
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SOURCE Cox Automotive