U.S. Used-Vehicle Prices Rise for Sixth Month in Row

By Doron Levin
July 7 (Bloomberg) -- U.S. used-vehicle prices rose for the sixth straight month, as slumping sales of new cars and trucks reduce the supply, according to Manheim Consulting.

The Manheim Used Vehicle Value Index, which measures wholesale prices at auctions, increased 5.8 percent in June from a year earlier, the Atlanta-based data provider said today in a statement. The biggest gains were for pickup trucks and sport- utility vehicles, after demand tumbled in mid-2008 as gasoline prices soared to a record high.

The index has risen each month this year, reaching 114.1 in June after ending last year at 98. The gain reflects “the significant reduction in potential supply available,” Manheim said. Fewer used vehicles are available as trade-ins decline because of the drop in sales of new cars and trucks.

“I would hesitate to say that retail demand for used vehicles is high,” Tom Webb, Manheim Consulting’s chief economist, said on a conference call with reporters and analysts. “There are fewer cars from rental fleets, fewer consigned from dealers.”

The rise in used-vehicle prices doesn’t indicate growing demand for new cars and trucks, Webb said. Increased prices for used autos often set the stage for stronger demand for new vehicles and, eventually, a boost in production.

“The used vehicles of tomorrow aren’t being produced today,” Webb said in the statement. The diminishing supply eventually will put pressure on auto retailers and wholesalers to boost the number of transactions, which “would go against the grain of a multidecade trend.”

The drop in gasoline prices from a year earlier contributed to price increases of 27 percent for used pickups and 26 percent for SUVs, Manheim said. Prices for compact cars declined 9.9 percent. U.S. consumers paid an average $2.60 a gallon for gasoline yesterday, compared with $4.11 a year earlier, according to motorist group AAA.