Though up more than 13 percent from February, the number of late-model units hitting the auction lanes in March continued what’s looking like a slowdown from 2017.
According to the latest Guidelines report from J.D. Power Valuation Services, late-model auction last month was down 11.7 percent year-over-year.
While the year-to-date decline eased from February (where it was 5.8 percent), first quarter late-model volume was still down 5.3 percent in March, the report said.
“At the segment level, so far year-to-date, some of the largest volume increases have been observed among SUV segments, ” J.D. Power analysts said in the report, pointing out luxury compact utility vehicles (up 71.7 percent) and large utility vehicles (up 27.8 percent).
Elsewhere in the report, J.D. Power did note one particular segment — albeit, not just within late models, but vehicles up to 8 years in age — that saw a massive jump in volume last month.
Auction volume for luxury large utilities climbed almost 24 percent from February. Year-to-date, it has jumped 3.9 percent. And that “isn’t helping prices” for the segment, which were down 3.1 percent in March.
Another year of 10 million cars
Overall, you can expect another year of 10 million wholesale vehicles at traditional, brick-and-mortar auto auctions in 2018, according to Cox Automotive’s 2018 Used Car Market Report & Outlook.
That report’s section on wholesale volumes and pricing was written by Zohaib Rahim, manager of economic industry insights at Cox Automotive .Rahim said wholesale volumes at physical auctions should remain at this “near-record” height referenced above. In 2017, the tally was close to 10 million, according to an estimate of member auction sales by the National Auto Auction Association cited in the Cox Automotive report.
However, look for a spike in the number of cars going into off-site digital channels, Rahim said in the report.
“If 2017 was the year of traditional auctions, 2018 will be the year of an increase in non-traditional channels,” Rahim wrote. “Total wholesale transactions in a given year are more than twice the NAAA-member volume. Other channels include direct sales between dealers — sometimes with a wholesaler as an intermediary — commercial accounts selling directly to dealers or retail customers, and sales at non-NAAA member auctions.”
Rahim goes on to point out that lease returns, a major source of used-car supply, will go through a number of various channels — including, but not limited to, the physical auctions — to reach the wholesale market.
“Still, despite the large volume in the other channels, it is the real-time, competitive-bid price discovery in the auction channel that serves as the benchmark for pricing in the other venues,” Rahim said.