In November, average wholesale prices were up on a month-over-month basis and essentially flat on a year-over-year basis, but as in previous months, the uptick was largely driven by truck prices. Off-rental units showed price gains, but these gains are deceiving, as manufacturers and rental sellers reduced “conversion rates” (i.e., units sold as a percentage of units offered) and only sold those units that reached or exceeded their asking prices. Moreover, significant price softness was again shown in three-year-old units, which reflects the downward pressure on prices resulting from growth in off-lease volume.

In short, data and other analysts are increasingly validating comments made here for many months about inevitable price softness from growing used vehicle supply. Also as noted repeatedly here, the major saving grace keeping prices from falling further and sooner has been strong retail demand, especially for certified pre-owned (CPO) vehicles.

It should also be noted that the soft pricing conditions are affecting institutional consignors more than dealers, who have the option of retailing vehicles and only wholesaling units for which they can obtain attractive sales prices. Besides the strength of retail sales, this advantage is evident in strong month-over-month and year-over-year wholesale price performance for dealer consignors.

To read the entire Kontos Kommentary used vehicle market outlook for November 2015, visit adesa.com/kontos-kommentary.