Data Point
Manheim Index Shows Historic Wholesale Price Increase in October
Friday November 5, 2021
Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 9.2% month over month in October. This brought the Manheim Used Vehicle Value Index to 223.7, a 38.1% increase from a year ago. Some of the monthly increase is a result of the seasonal adjustment, as October typically sees above-average vehicle depreciation and therefore used price declines. This October was the first October in the history of the Manheim Index data, which dates to 1997, to see a non-seasonally adjusted price increase in October. The non-adjusted price increase in October was 5.4%.
Manheim Market Report (MMR) values saw weekly price increases accelerate and peak in mid-October. Over the full four weeks in the month, the Three-Year-Old Index increased a net 5.5%. Over the month of October, MMR Retention, which is the average difference in price relative to current MMR, averaged 100.7%, which meant that market prices were ahead of MMR values. The sales conversion rate also increased in the month to 67%, which is a much higher conversion rate than is typical for October. For example, the sales conversion rate averaged 49% in October 2019. This indicates that buyers are much more aggressive in buying than is typically the case in the fall.
On a year-over-year basis, all major market segments saw seasonally adjusted price increases in October. Midsize cars and vans had the largest year-over-year performance, while the pickup and luxury car segments lagged the overall market. On a month-over-month basis, no segment saw declines, with compact cars outpacing the market and remaining segments.
Vehicle sales continue downward trend. According to Cox Automotive estimates, total used vehicle sales were down 10% year over year in October. We estimate the October used SAAR to be 35.9 million, down from 39.9 million last October and flat compared to September’s 35.9 million SAAR. The October used retail SAAR estimate is 19.6 million, down from 21.1 million last year and flat month-over-month.
Using a rolling seven-day estimate of used retail days’ supply based on vAuto data, we see that used retail supply peaked at 114 days on April 8, 2020. Normal used retail supply is about 44 days’ supply. It ended October at 39 days, below normal levels. We estimate that wholesale supply peaked at 149 days on April 9, 2020, when normal supply is 23. It ended October at 18 days.
October total new-vehicle sales were down 23% year over year, with one less selling day compared to October 2020. Month over month, October new-vehicle sales were up 4%. The October SAAR came in at 13.0 million, a decrease from last year’s 16.4 million and October 2019’s 16.7 million rate.
Combined sales into large rental, commercial, and government buyers were down 24% year-over-year in October. Sales into rental decreased 43% year-over-year in October and are up 2% year-to-date through last month compared to the same time period last year. Commercial sales are down 7% year-over-year in October and are up 11% year-to-date in 2021 versus 2020. Including an estimate for fleet deliveries into the dealer and manufacturer channel, we estimate that the remaining retail sales were down 21% year-over-year in October, leading to an estimated retail SAAR of 11.5 million, which was down from 14.1 million last October and down from October 2019’s 13.5 million rate.
Rental risk mileage increases. The average price for rental risk units sold at auction in October was up 46% year-over-year. Rental risk prices were up 2% compared to September. Average mileage for rental risk units in October (at 61,000 miles) was up 11% compared to a year ago and up 7% month-over-month.
October brings improvement in consumer confidence. Consumer Confidence according to the Conference Board improved 4.1% in October, almost offsetting September’s decline. The increase left confidence down 14.2% compared to February 2020. The increase marked the first month of improvement since June. Both the underlying measures of the present situation and future expectations improved. Plans to purchase a vehicle in the next six months increased as well and are now higher than a year ago. Plans to purchase a home also improved to their highest level since February and were also up year-over-year. However, other measures of consumer sentiment suggest confidence may not have turned the corner yet. The sentiment index from the University of Michigan reported a 1.5% decline in October as both current conditions and expectations declined. The Morning Consult daily index saw a 1.7% decline in October.
The complete suite of monthly MUVVI data for November will be released on Tuesday, Dec. 7, 2021, the fifth business day of the month as regularly scheduled. If you have any questions regarding the Index, please contact the Cox Automotive Industry Insights team at Manheim.Data@coxautoinc.com.