Used Car News

Dealers continue paying more for cars at auction despite evidence of lower retail demand.

The Manheim Used Vehicle Value Index hit a record high of 118.5, representing a 6.9 percent increase from a year ago.
The Index rose 1.8 percent in September and has increased every month this year.
The Index measure wholesale prices adjusted for mix, mileage and seasonality.
Manheim chief economist Tom Webb said the increase was due almost entirely to the inventory shortage created by a lack of new-car sales.
He said retail sales declined in September, with franchise dealers falling off the most.
AutoData Corp.’s certified sales report reflects this weakness.
Dealer sold 111,559 certified pre-owned units in September 2009, down from 124,491 in September 2008. Sales were lower despite an extra selling day this year.
“Unless retail demand becomes more robust, we should see some pullback,” Webb said.
Wholesale prices started showing signs of dropping at the end of September, he said.
The inventory supply will remain tight, although there was some increase in off-rental and dealer-consignment volumes.
September marked one of the few times the Manheim Index and the Conference Board’s Consumer Confidence Index moved in opposite directions.
The Consumer Confidence Index declined to 53.1 in September from 54.5 in August.
“There’s a lot of angst out there,” Webb said.
Much comes from the employment outlook, which continues deteriorating.
The U.S. economy shed another 263,000 jobs in September, according to the Bureau of Labor Statistics. This boosts the unemployment rate to 9.8 percent.
Webb said it could take years for a return to full employment.
He predicts the economy will start adding jobs by March, but by then 8 million jobs could be lost. It would take at least two years of strong growth to return to the recent employment peak, Webb said.
How the economy will reach that point is hard to say. The jobless rate remained high for two and a half years into the last recovery and that was fueled mainly by easy credit.
“If we look at it in hindsight, we know much of that recovery was a sham,” Webb said.