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 Surging Early in 2021
Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 3.79% month-over-month in February. This brought the Manheim Used Vehicle Value Index to 169.2, a 17.9% 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 0.9% last week, leaving prices up 2.4% over the four weeks of February. The increase last week was the strongest increase for that week for any year since 2014. Over the month of February, MMR Retention, which is the average difference in price relative to current MMR, averaged 101%. 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 February. Pickup trucks outperformed the overall market, while most other major segments underperformed the overall market.
Soft retail results for vehicle sales. According to Cox Automotive estimates, total used vehicle sales were down 3% year-over-year in February. We estimate the February used SAAR to be 38.0 million, down from 39.4 million last February and flat compared to January’s 38.1 million rate. The February used retail SAAR estimate is 20.8 million, down from 20.9 million last year and flat month-over-month from January.
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 February at 34 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 23 days by month end.
February total new vehicle sales were down 12.6% year-over-year, with two fewer selling days compared to February 2020. The February SAAR came in at 15.7 million, a decrease from last year’s 16.8 million and down from January’s 16.6 million rate.
Combined sales into large rental, commercial, and government buyers were down 36% year-over-year in February. Including an estimate for fleet deliveries into the dealer and manufacturer channel, we estimate that the remaining retail sales were down 5% year-over-year in February, leading to an estimated retail SAAR of 13.0 million, slightly up from 12.8 million last February but down from January’s 14.0 million rate.
New vehicle inventories came in around 2.6 million units, which was down 26% from February 2020.
Rental risk pricing improves. The average price for rental risk units sold at auction in February was up 11% year-over-year. Rental risk prices were up 4% compared to January. Average mileage for rental risk units in February (at 52,800 miles) was up 2% compared to a year ago and up 6% month-over-month.
Consumer spending and confidence increase, but coronavirus uncertainty remains. Consumer spending increased 2.4% in January as personal income jumped 10%. Spending on durable goods increased 8.4% in January, while spending on nondurable goods increased 4.3%, and spending on services increased 0.7%. Spending on new motor vehicles increased 5%. The jump in personal income was driven by an 85% increase in unemployment benefit payments and a 257% increase in other transfer payments. The government transfer increases were provided by the $900 billion stimulus package signed into law late in December, which delivered $600 payments to many Americans and provided $300 per week in additional unemployment benefits, as well as extended pandemic assistance benefits that had expired in December. The personal savings rate increased to 20.5%, which was the highest savings rate since May. Consumer Confidence according to the Conference Board increased 2.7% in February and left confidence down 31% year-over-year. Plans to purchase a vehicle in the next six months declined in February from January and was down year-over-year. Plans to purchase a home also declined in February and was also down year-over-year.