NHADA DIAMOND PARTNER COX AUTOMOTIVE INC. Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 1.6% month over month in December. This brought the Manheim Used Vehicle Value Index to a record high of 236.2, a 46.6% increase from a year ago. The non-adjusted price change, however, declined 1.1% from November, leaving the unadjusted average price up 43.4% year over year. • Wholesale used vehicle values showed signs of cooling in the final month of 2021, with prices paid at auction heading lower in the final weeks of the year. • Despite wholesale value declines, retail used-vehicle prices keep climbing, with average list prices now approaching a record high of $28,000. • Tax refunds and a supply-constrained market will likely lead to another round of price increases in the first half of 2022, before normal price depreciation returns. “The wholesale auction market began to slow in the final weeks of the year, but prices typically bounce in the spring,” said Cox Automotive Chief Economist Jonathan Smoke. “We don’t anticipate 2022 will be an exception, especially with record-level tax refunds expected and ongoing inventory challenges. Unfortunately for consumers, it will be the second half of 2022 before we begin to see normal price depreciation again, barring any further supply chain disruptions. Uncertainty exists around what, if any, impact the omicron variant will have on supply chain and inventory.” Manheim Market Report (MMR) values saw weekly price decreases in December that accelerated in the final weeks of the month. MMR is a valuation tool used by tens of thousands of consignors and dealers to assess millions of trade-ins each month. MMR is designed to be highly stable and avoid overreacting to short-term market ups and downs and provide an accurate measure of vehicle valuations regardless of market conditions. Over the full four weeks of December, the Three-Year-Old Index declined a net 1.7%. Over the month of December, daily MMR Retention, which is the average difference in price relative to current MMR averaged 98.3%, indicating market prices were below MMR values. The average daily sales conversion rate also declined in December. At 53%, the conversion rate was close to normal for the final month of the year. The sales conversion rate averaged 52% in December 2019. This indicates that the month saw a balance between buyers and sellers. As a result, every top-selling vehicle lost value month over month in December on a nonseasonally adjusted basis. However, more appreciation is expected with strong seasonal demand and robust tax refunds through the spring. On a year-over-year basis, all major market segments saw seasonally adjusted price increases in December. Vans had the largest year-over-year performance, while the pickup, luxury car, and SUV segments lagged the overall market. On a month-over-month basis, no segment saw declines, as compact and luxury vehicles outpaced the market and remaining segments. High prices and inventory challenges lead to slowing sales According to Cox Automotive estimates, total used-vehicle sales were down 4% year over year in December. The December used vehicle seasonally adjusted annual rate (SAAR) of sales was 39.1 million, down from 40.6 million last December and flat compared to November’s revised ManheimForecast: GROWTH IN USED VEHICLE VALUES EXPECTED TO CONTINUE THROUGH SPRING 2022 18 D R I V E
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