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."
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