February/March 2023 Kontos Kommentary
The following commentary is produced by Tom Kontos, Chief Economist, ADESA Auctions.
Summary
Average wholesale used vehicle prices rose for the second consecutive month in February and well into March.
Certified pre-owned (CPO) sales also rose in February despite short supplies of late-model vehicles, as OEMs have expanded their programs to include older models and consumers look for ways to fight inflation.
Wholesale Market Trends*
According to ADESA US Analytical Services鈥 monthly analysis of auction industry used vehicle prices by vehicle model class, wholesale prices in February averaged $15,311鈥攗p 3.9% compared to January, down 5.7% relative to February 2022, and up 42.1% versus pre-pandemic/February 2019, as seen below. All model class segments showed average price increases for the month with the exception of fullsize vans, which were modestly down.
Average prices have continued to increase in March and stood at $16,525 for the week ending March 19.
Further insights on wholesale price trends can be gained by holding constant for auction sale type, model-year age and mileage (the upper line in the following graph, which represents late-model units), as well as price trends for all vehicles sold (the lower line in the graph below).
Late-model price growth in part reflects strong demand for CPO-eligible units. Average prices for this group of vehicles have also continued to increase in March and stood at $26,054 for the week ending March 19.
A with historical data broken out by model class for the table and graph in this section has been provided with this report for your convenience in tracking these trends going forward.
Retail Market Trends
The monthly data presented in this section on retail used vehicle sales by franchised and independent dealers from the National Automobile Dealers Association (NADA) was not available at the time of this report. However, monthly data on certified pre-owned (CPO) sales from Market Intelligence is provided below.
Note that CPO sales have improved this year despite wholesale supply shortages of late-model used vehicles eligible for certification. This improvement in sales is partly the result of expansion by OEMs of their certification programs to include older units. In addition, many inflation-sensitive consumers are substituting new vehicle purchases with less-expensive CPO buys.
Disclaimer: The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to ADESA US. The views and analysis are not the views of ADESA US, its management, its subsidiaries or its parent companies; and their accuracy is not warranted.
Forward-Looking Statements: The statements contained in this report and statements that ADESA US, its management, its subsidiaries or its parent companies may make orally in connection with this report that are not historical facts (including, but not limited to, expectations, estimates, assumptions and projections regarding the industry and business) may be forward-looking statements. Words such as 鈥渃ould,鈥 鈥渟hould,鈥 鈥渕ay,鈥 鈥渨ill,鈥 鈥渁nticipates,鈥 鈥渆xpects,鈥 鈥渋ntends,鈥 鈥減lans,鈥 鈥渂elieves,鈥 鈥渟eeks,鈥 鈥渆stimates,鈥 鈥減romises," 鈥渓ikely to,鈥 鈥渙utlook,鈥 鈥減otential,鈥 鈥減roject鈥 and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the 鈥淩isk Factors鈥 identified in Carvana Co.鈥檚 Securities and Exchange Commission filings. Neither ADESA US nor its subsidiaries or parent companies undertakes any obligation to update any forward-looking statements.