Wholesale Prices Push Down in May

Though wholesale prices remain elevated, rates were on the way down in the lanes this past month.

In May, the Manheim Canada Used Vehicle Value Index was down four points from April to sit at 98.9.

Though rates are falling from early-spring highs, this number remains up 12 points year-over-year.

That said, Don Wallace, general manager at Manheim Toronto, told Auto Remarketing Canada, "The industry is seeing softening to the hyper-inflated used vehicle prices of 2013.

Don Wallace, Manheim Toronto

"The first quarter of 2014 has shown more traditional levels. Retail new volume generating the majority of the auction business through dealer trades is noticeably, as well," Wallace said. "Prices have also been inflated due to U.S. buyers, or exports to U.S. by Canadian sellers, which have declined in the past quarter, as well."

All vehicle categories Manheim Canada tracks decreased month-over-month.

When asked what is pushing the index down in 2014, Wallace said, "Several manufacturers have experienced shortages in new vehicle deliveries for the 2014 model year, but productions has now caught up to demand, influencing late model demand at auctions."

Compacts led the way in May for price declines, with a 7.8 point decrease on the index.

This trend is primarily due to prices at the pump.

"Compacts have steadily declined in the past year as consumers have adapted to current pump prices. This has become the norm every time we see spikes in the price of gas after initial quick run ups," Wallace explained.

Vans followed with a decrease of 5.1 points; mid-size cars fell by 4.9 points; luxury cars dropped by 3.6 points; and pickups dropped by 2.4 points.

The smallest price drops seen this month was in the SUV segment. These vehicles saw a drop of 1.4 points on the index.

"Pickups are still in very short supply. SUVs are tied to gas again where the buyers have been acclimatized to current price at the pump," Wallace said.

Looking ahead to the rest of the year, Wallace said, "Time will tell," but he predicts incentive movement might serve to push prices down further.

"I suspect more micro-economic factors affecting new vehicles sales will drive OEM's to adjust incentives to maintain sales volume, which will have a bigger effect on used vehicle pricing than economic conditions," he said. "If one or more of the top sellers' sales decline through the summer months then we can expect aggressive incentive spending to recapture business. Heavy incentive spending, which has been on the decline, would adversely affect used car prices. Seasonal prices are also expected to normalize to traditional adjustments."

http://www.redlineautosales.ca/wholesale-prices-push-down-in-may.htm