May marked a 0.8-percent decline in wholesale prices, and just one major market class showed a year-over-year gain in value during the month, according to Manheim’s Tom Webb, who offered his analysis in the latest Manheim Used Vehicle Value Index report.
Overall, the index was at 125.1 for May, compared to 126.1 in April.
“The year-over-year decline increased to 2.1 percent as the comparison was made against the Index's all-time high reading,” Webb explained.
“In May, the economy weakened and new-vehicle sales failed to meet expectations, but the volume of used vehicles retailed continued to rise, and dealership profits on those sales were strong,” he added.
Breaking the data down by segment, the only major market class to see an uptick in used values was the pickup category. Webb emphasized volume is tight for this class, particularly mid-mileage models. Meanwhile, compact car movements told a different story.
“Compact cars have the largest year-over-year decline in pricing, but that is simply because the comparison is against the record levels achieved in May of last year,” Webb stated. “Sellers are still achieving prices that they wouldn't have dreamed of three years ago.”
Sharing more analysis, Webb also pointed out that rental risk units, interestingly enough, had their strongest May on record for used prices, despite declining more than 3 percent from April.
“Auction volumes for rental risk vehicles continued to run well above year-ago levels. Average mileage was the same as April, but down 8 percent from May 2011,” he noted.
Ahead of the Bell: Wholesale Inventories - CNBC
WASHINGTON - Businesses likely slowed their restocking of store shelves this year following a big jump in inventory building at the end of last year.
The Commerce Department will report on inventories for April on Friday at 10 a.m. Eastern time. Many economists were looking for another modest gain with analysts forecasting that sales at the wholesale level rose 0.4 percent, according to a survey by FactSet.
Businesses order more goods when they increase their stockpiles. That typically leads to more factory production and economic growth.
It would have taken roughly five weeks to exhaust all wholesale stockpiles at the March sales pace. That's considered a healthy time frame and suggests businesses will keep restocking to meet demand.
Inventories are expected to keep growing this year, though probably nowhere near the level seen at the end of last year.
Many businesses cut back on restocking last summer fearing that the economy was on the verge of another recession. When it became clear that it wasn't, they raced to rebuild stockpiles and keep pace with consumer demand.
In the first three months of this year, the economy grew at an annual rate of 1.9 percent. That gain was driven by the fastest growth in consumer spending since late 2010.
Consumers spent more partly in response to strong hiring. But hiring has slowed sharply over the past two months. In May, employers add just 69,000 jobs, the smallest increase in a year, and the unemployment rate edged up form 8.1 percent in April to 8.2 percent in March.
And wages have continued to lag as well. Sluggish job growth and weak pay raises threaten to drag on consumer spending. That would weaken growth. Consumer spending accounts for 70 percent of economic activity.
Stockpiles at the wholesale level account for about 27 percent of total business inventories. Stockpiles held by retailers make up about one-third of the total. Manufacturing inventories represent about 40 percent of the total.
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