The following commentary is produced monthly by Tom Kontos, Executive Vice-President, ADESA Analytical Services. ADESA is a leading provider of wholesale used vehicle auctions and ancillary remarketing services. As part of the KAR Auction Services family, ADESA works in collaboration with its sister company, Insurance Auto Auctions a leading salvage auto auction company, to provide insights, trends and highlights of the entire automotive auction industry.

November 2012 Kontos Kommentary

Summary

Average wholesale used vehicle prices in November resumed the general softening they have shown since Spring, after what may turn out to be only an upward “blip” in October due to Superstorm Sandy.  Nevertheless, prices may have shown even more Thanksgiving holiday softening if it weren’t for the strong retail demand and somewhat diminished supply in the Northeast following the storm.  Prices for younger units also held up quite well, especially for off-rental program units sold by auto manufacturers.  This upward pressure on prices will gradually wane and remarketers would be well advised to try and sell units sooner rather than later, perhaps by year-end.

Details

According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class¹, wholesale used vehicle prices in November averaged $9,554 – down 2.2% compared to October and down 3.2% relative to November 2011.  Fullsize cars, vans and SUVs took the biggest price hits during the month.

Prices for used vehicles remarketed by manufacturers rose by 2.7% month-over-month in November, and were up 6.2% year-over-year, indicating good absorption of off-rental program vehicles.  Fleet/lease consignors experienced a 3.0% decrease in November, leaving prices down 2.6% year-over-year.  Dealer consignors saw a 1.7% average price decrease versus October, resulting in prices being down 3.9% versus November 2011.

Based on data from CNW Marketing/Research, retail used vehicle sales in November were up 28.7% year-over-year for franchised dealers and 32.7% for independent dealers, although down by 6.6% month-over-month for both groups combined.  November sales of certified used vehicles were up 0.9% month-over-month but up by 7.3% year-over-year based on data from Autodata.

¹The analysis is based on nearly six million annual sales transactions from over 150 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. ADESA Analytical Services segregates these transactions to study trends by vehicle model class.

The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to KAR Auction Services, Inc. The views and analysis are not the views of KAR Auction Services, its management or its subsidiaries; and their accuracy is not warranted. The statements contained in this report and statements that the company may make orally in connection with this report that are not historical facts are forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “bode”, “promises”, “likely to” 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 company’s Securities and Exchange Commission filings. The company does not undertake any obligation to update any forward-looking statements.