Used Vehicle Value Index
By applying statistical analysis to its database of more than 5 million used vehicle transactions annually, Manheim has developed a measurement of used vehicle prices that is independent of underlying shifts in the characteristics of vehicles being sold. View the index methodology.
The Manheim Index is increasingly recognized by both financial and economic analysts as the premier indicator of pricing trends in the used vehicle market, but should not be considered indicative or predictive of any individual remarketer's results.
Wholesale Prices Jump With Spring Bounce
Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 5.87% month-over-month in March. This brought the Manheim Used Vehicle Value Index to 179.2, a 26.2% increase from a year ago and a record high for the Index.
Manheim Market Report (MMR) prices strengthened as the month progressed. The Three-Year-Old MMR Index, which represents the largest model year cohort at auction, increased 1.7% in each of the last three weeks. Over the four full weeks of March, the Three-Year-Old Index increased 6.4%. Over the month of March, MMR Retention, which is the average difference in price relative to current MMR, averaged 102.9%. The sales conversion rate also increased for most of the month.
On a year-over-year basis, all major market segments saw seasonally adjusted price increases in March. Pickup trucks outperformed the overall market, while most other major segments underperformed the overall market.
Strong retail results for vehicle sales. According to Cox Automotive estimates, total used vehicle sales were up 117% year-over-year in March. We estimate the March used SAAR to be 40.5 million, up from 18.5 million last March and up compared to February’s 38.0 million rate. The March used retail SAAR estimate is 22.2 million, up from 9.8 million last year and up month-over-month from February’s 20.8 million rate.
Using a rolling seven-day estimate of used retail days’ supply based on vAuto data, we see that used retail supply peaked at 115 days on April 8, 2020. Normal used retail supply is about 44 days’ supply. It ended March at 29 days, which is below normal levels. We estimate that wholesale supply peaked at 149 days on April 9, 2020, when normal supply is 23. It was down to 18 days by month end.
March total new vehicle sales were up 59.7% year-over-year, with one more selling day compared to March 2020. The March SAAR came in at 17.7 million, an increase from last year’s 11.4 million and the highest monthly SAAR since October 2017.
Combined sales into large rental, commercial, and government buyers were down 20% year-over-year in March. Including an estimate for fleet deliveries into the dealer and manufacturer channel, we estimate that the remaining retail sales were up 87% year-over-year in March, leading to an estimated retail SAAR of 15.4 million, up from 8.4 million last March and up from March 2019’s 13.4 million rate.
New vehicle inventories came in around 2.4 million units, which was down 37% from March 2020.
Rental risk pricing improves. The average price for rental risk units sold at auction in March was up 8% year-over-year. Rental risk prices were flat compared to February. Average mileage for rental risk units in March (at 67,000 miles) was up 46% compared to a year ago and up 27% month-over-month.
Consumer Confidence increases, but coronavirus uncertainty remains. Consumer Confidence according to the Conference Board jumped 21.3% in March and left confidence down 17% compared to February 2020. Plans to purchase a vehicle in the next six months increased in March to a 13-month high and even with purchase intention last June. Plans to purchase a home also increased in March to its highest level in the history of the Consumer Confidence data. The Morning Consult Index measured 5.7% in gains in March after losing some momentum in the last week of the month. The index has resumed an upward trend to start April and is now down 11.9% since Feb. 29, 2020. The headline unemployment rate declined to 6.0% in March. However, the BLS reported that the rate could have been 0.4 points higher if not for misclassification due to confusion about people considered as employed but away from work. This misclassification error rate declined from February, so the headline unemployment rate did see a real decline. The labor force participation rate increased 0.1% in March to 61.5%, which means that the decline in the unemployment rate was a result of an even larger gain in jobs than indicated by the change in the unemployment rate. The underemployment rate, which is the broadest measure of unemployment, declined to 10.7%. The percentage of the unemployed reporting being on temporary layoff, as opposed to permanent, declined to 20.9%, which was the lowest level since February 2020. The number of permanently unemployed declined by 65,000 in March.