In the last two years, demand for used vehicles appears to be boosting dealer transaction prices, at least that’s the view of Manheim Auctions’ chief economist, Tom Webb. He says that based on data compiled between October 2010 and October 2012 in the U.S., dealers appear to be willing to fork out more money for higher mileage vehicles today than they probably would have done a few years ago.
Autoremarketing magazine reported this week, that in a post on his blog, Webb explained that “an increase in average mileage for vehicles within a given tier means that prices are strengthening since it implies that dealers are willing to spend the same amount of money for a vehicle with higher mileage.”
Each of the tiers Webb analyzed showed an increase in mileage, with the biggest increase in average mileage (or pricing strength) occurring for vehicles in the $8,000 to $11,000 range.
“Simply put,” he said, “if you paid $9,500 for a vehicle at auction in 2010, you got, on average, one with 58,500 miles (94,147 km). This year, that same $9,500 got you a vehicle with 78,700 miles (126,660 km) on the odometer.”
However, the downside is that despite a boost in asking prices for higher mileage vehicles, dealers seem to be getting less metal for their money today when purchasing such cars and trucks. “When there have been large movements in auction volumes and pricing (like between 2010 and 2012), you find individual price tiers where there has been big change in available supply and average mileage,” said Webb.
“And, naturally, the line is downward sloping,” he added, referring to a chart of the related data posted in his blog. “In periods of more stable auction volumes and pricing (like between 2011 and 2012), the slope is less steep and the relationship less strong,” Webb remarked.
To see Webb’s actual blog post and the related charts click this link: http://manheimconsulting.typepad.com/manheim-consulting/2012/12/wholesale-values-which-price-tiers-are-the-strongest.html
