Recovery Continues with Wholesale Auction Prices Now Within Single Digits of Pre-COVID-19 Projections

Used-vehicle sales continue to show signs of noticeable improvement as dealers reopen showrooms and physical auctions return to meet demand and chip away at used-vehicle inventories, according to the latest COVID-19 Valuation Services Update from J.D. Power.

“Auction prices continue to recover as markets gradually open back up and demand for used vehicles solidifies," says Jonathan Banks, VP, Vehicle Valuations & Analytics, Valuation Services J.D. Power. "As a result, wholesale auction prices improved for the third week in a row.”

J.D. Power Analysis of Weekly Used Vehicle Prices

The week ending May 10 posted a 2% week-over-week increase in wholesale auction prices. Meanwhile, lagging sales for the week of May 3 helped lift prices this week by 1.8%. Altogether, prices have risen 6% over the past three weeks and are now down only 9% from pre-virus forecasts during the week of May 10. This is a substantial improvement when compared with the 16% trough recorded for the week ending April 19.

"We are also seeing significant strength in passenger car prices, which have in recent weeks posted impressive gains," Banks says. "This could be an early indicator of price-sensitive consumers returning to the marketplace."

Mass market prices have improved between 8% and 9% since the week ending April 19. A similar pattern is unfolding on the luxury side of the market for midsize and large cars, where prices have improved by more than 7%.

"Used retail prices continue to show strength, falling by only 0.4% over the week ending May 10," Banks says. "Even better is the fact that used retail prices have fallen by only 3% since the beginning of March."

Direct-to-dealer prices were essentially unchanged last week. This continues a three-week trend of stability, with price levels down only 6% compared with the beginning of March.

Wholesale Volume Also Rising

"Auction sales exceeded 64,000 units for the week ending May 10, which is still 38% below pre-virus expectations," Banks says. "However, lagging sales reports for the week ending May 3 added approximately 10,000 units to the tally. As a result, wholesale sales have now surpassed 60,000 units for two consecutive weeks."

(To read the entire COVID-19 Valuation Services Update from J.D. Power visit: https://bit.ly/3cwjaYk)