Manheim Used Vehicle Value Index Ends 2020 Near Record High, Despite Drop in December – Remarketing

Wholesale used-vehicle prices decreased 0.59% month over month in December 2020, bringing the Manheim Used Vehicle Value Index to 161.1, a 14.2% gain from a year ago, according to Cox Automotive.

Manheim Market Report (MMR) prices declined each week over the four full weeks of December, resulting in a 2.2% cumulative wholesale price decline on the three-year-old Index, according to Manheim. In the last full week of December, the index declined 0.6%, a larger than average decline for the final week of the year. 

MMR retention, which is the average difference in price relative to current MMR, averaged 99.4% in December. The sales conversion rate averaged 51% over the month, a decline from November and relatively low for this time of year.

On a year-over-year basis, most major market segments saw seasonally adjusted wholesale price increases in December.

“It will be important going forward to assess if at any point this might imply a correction could happen when the imbalance is no longer so heavily weighted towards demand,” said Cox Automotive Chief Economist Jonathan Smoke. “As we expected, what we have been seeing so far shows no evidence of a correction or one on the horizon. Supply remains tight, and demand remains strong despite some softening this fall. While January is a bit of a wild card for the economy, as we get closer to the spring, conditions look to be very favorable for used vehicle values.”

The total used-vehicle sales volume in December was down 5% year over year, according to Cox Automotive estimates. The December used seasonally adjusted annual rate (SAAR) is estimated at 38.0 million, down from 40 million last December but up from November’s 37 million rate. The December used-retail SAAR estimate is 20.2 million, down from 20.8 million last year but from November’s 19.6 million rate.

Cox Automotive is estimating total used-vehicle sales in 2020 at 36.7 million, down 8% from the 40 million in 2019. Retail used-vehicle sales in 2020 are estimated to be 19.5 million, down from 20.8 million in 2019.

Using a rolling seven-day estimate of used retail days’ supply, supply peaked at 115 days on April 8, according to Cox. Normal used retail supply is about 44 days’ supply. It ended December at 49 days, slightly above normal levels. Wholesale supply peaked at 149 days on April 9, when normal supply is 23. December ended with 47 days’ supply, as the wholesale sales pace slowed.