Better Week for Auto Wholesale Market: Volumes Continue Modest Rise as Prices Tick Up for First Time Since COVID-19 Pandemic

There is room for cautious optimism as the auto industry closed out the week ending April 26 with improvements in both the wholesale and retail segments of the used-vehicle market, according to the latest COVID-19 Valuation Services Update from J.D. Power.

The big news this week is in the strengthening wholesale pricing picture.

"Wholesale auction prices grew by just over 1% on a weekly basis for the week ending April 26," says Jonathan Banks, VP Vehicle Valuations & Analytics, Valuation Services, J.D. Power. "While only a slight uptick, the week's positive result marks the first improvement observed since the virus manifested in March.”

Segment Auction Prices, J.D. Power

"Segment level performances were once again mixed, but the majority of segments experienced price changes that were flat to slightly up." Banks says.

On the volume front, wholesale auction sales remain severely depressed compared with pre-virus projections. That said, sales continue to slowly recover as channels open and dealer demand increases. Wholesale auction sales reached nearly 40,000 units the week ending April 26, which was more than double the 18,000 sales recorded the week ending April 5.

"All in all, an encouraging week for the wholesale segment offering definite signs of a strengthening market," Banks notes.

Direct-to-Dealer Wholesale Prices Hold Up Well

This week, the J.D. Power Valuation Services team provides a deep-dive analysis of the direct-to-dealer wholesale sales.

"These are the sales to dealers that occur prior to the physical auctions," Banks says. "They occur when local grounding dealers buy consumers' off-lease vehicles directly from the captive finance company, or when non-grounding dealers purchase off-lease vehicles from captive finance companies via dedicated online channels."

The analysis reveals that direct-to-dealer wholesale prices have held up far better than prices at physical wholesale auctions. For the week ending April 26, direct-to-dealer wholesale prices are down about 6% vs. the beginning of March, a relatively small decrease when compared with the 14% decline recorded for wholesale auction prices over the same period.

"This reveals that while wholesale auction activity and prices have been severely curtailed by stay-at-home orders, prices have remained far more stable in the more flexible and open upstream wholesale channels," Banks says.

(To read the entire COVID-19 Valuation Services Update from J.D. Power visit: https://bit.ly/2xnZ3MF)