February Sees Increase in Used Vehicle Value
Manheim's Used Vehicle Value Index indicated a 105.5 value in February, up from 101.7 in January. Compared to the second month of 2008, the index decreased from 108.1. Wholesale used vehicle prices, on a mix, mileage, and seasonally adjusted basis now stands 3.7 percent higher than the previous month.
Car dealers say that buyers who can afford to purchase new cars, are instead opting for a used ones. Evidence of that is provided by the fact that many of today’s used vehicle customers are making significant downpayments and choose shorter loan maturity, which means that the monthly payment on their used vehicle loan would often be enough to buy a new one.
About 60 percent of all new vehicle sales generate trade-ins. Not taking into account rental companies and fleet buyers, sales of new vehicles in the US fell by roughly 610,000 units in the first two months of the year, compared to the same period of 2008.
"With forecasters continuing to lower new-vehicle sales forecasts for 2009, this supply dynamic is not going to change anytime soon," Webb added.
Manheim has developed a measurement of used vehicle prices works by applying statistical analysis to its database of more than 5 million used vehicle transactions annually, independent of underlying shifts in the characteristics of vehicles being sold. The Index is released on the fifth business day of each month.