Posted on 08/21/2020 9:31:47 AM PDT by Red Badger
Used Vehicle Prices Explode To All Time Highs After Plunging Just Months Ago Tyler Durden Thu, 08/20/2020 - 22:05
When you have the Central Bank back-stopping every industry in the United States, it's incredible how quickly things can change over the course of less than a quarter.
Less than two months ago we were talking about the unprecedented crash in used car prices that had taken place as a result of the coronavirus pandemic slowing the economy. "Where's the inflation?" everyone kept asking.
We think we've found it. Today, according to new research from Manheim, those prices have exploded to hit new all time highs. The Manheim Used Vehicle Value index climbed to 163.4 in the first 15 days of August from 158.0 in July.
"Prices rose another +3.4% sequentially in the first 15 days of August after rising +5.8% m/m in July," a new note from J.P. Morgan highlights. It continues: "With the Manheim Index at 163.4 in early August (January 1995 = 100), used prices are now +13.9% higher vs. the then record level in February just prior to the pandemic and are +15.6% y/y."
J.P. Morgan notes that "Since April, the Manheim Used Vehicle Value index recovered +8.9% m/m in May, +9.0% m/m in June, +5.8% m/m in July, and is now +3.4% m/m in the first 15 days of August. Stronger prices suggest potential gains on sale of off-lease vehicles and higher collateral value, helping reduce loan losses."
The note predicts that prices should see some respite heading into the fall, as "pent up demand" as a result of the Covid-19 pandemic should subside. Most of this demand has already been satisfied, according to Manheim, and consumers are growing "increasingly frustrated" from the high prices.
It's worth noting, however, that these same prognosticators were predicting a "sharp drop" in prices heading into the back end of the summer. That obviously didn't materialize. Additionally, the same note says that consumers could be waiting for a second round of stimulus to purchase a vehicle.
Recall, it was just two months ago that we had put out a note highlighting where used car prices were crashing the most in the U.S.
Back in June, Manheim indicated that wholesale prices dropped as much as 11% in April, but also that this price drop hadn't fully hit the retail market yet. The report predicted at the time that since "dealers have largely avoided purchasing new inventory in recent weeks, they aren’t in a rush to cut prices as a way to move their existing inventory."
It also predicted a sharp drop in retail prices in the coming weeks, stating that "a combination of record supply, damaged consumer confidence, and new car incentives will ultimately create a perfect storm causing retail prices to drop sharply in the coming weeks."
Between January and May, individual U.S. states experienced price drops ranging from 1% to 5%, the report showed.
Those days now seem to be distant memories...
I hear ya.
My old ‘71 Ventura I could open the hood and see (and access) everything in the engine. On what I drive now I’d be 2 days pulling wires and hoses just to be able to see the block, and then I’d likely find out it was a software problem anyhow.
Decades ago a friend in the biz told me that prices on used cars in dealer lots are $3K higher than what they have in them.
My CJ7 has the powdercoated chassis back and it is taking some shape. The body tub is at powder coating for a few welds, blast, patch as best possible, and coat.
People like the photos.
I’ve gotten compliments on that chassis.
If they still made them, I’d trade mine in on a new one. My wife refuses to drive this one because it’s so ugly. The whole fake grill and right headlight are gone, replaced by a couple of aftermarket LED lights that are embedded way behind the front.
My brother has the same car (Scion) and has just over 300k miles on it. It’s faded from the FL sun but it still drives like new.
I’ve heard the engine in those things is legendary for reliability.
Nice! When my daughter lived in Toledo I remember driving by the old smokestacks which still had WILLYS painted on them.
They were all weirdly optioned like F150s without the tow package.
Nope
There is a surplus inventory right now.
The trains kept coming with new vehicles for the last six months
There are yards all over the Bay Area full of new vehicles that haven’t been sold yet.
I also have a Willys jeep.
It hasn’t been tended to much lately.
Just had a ‘new’ engine and transmission put in my 1990’s Jeep Wrangler after 350K. It’s solid as a rock, looks great and will likely be good for another twenty five years!
I expect a main part is slowdown/shutdown of manufacturing new cars for months. Desired new cars becoming unavailable means having to look back to used cars matching desired models, and willingness to pay more for them.
I acuired a 304 that should work. Worst case, I have a core for another.
One transmission recommended is a Warner T18. A few options on transfer cases.
The skid plate is off being powdercoated.
15 pounds of powder has gone a long way.
I’m impressed with the life you’ve got out of yours.
I bet vans are in huge demand.
And Pick-ups.......................
Photos of both plus a lot of meaningless things can be found here:
I’ve been clearing drives of photos and video clips that were copied over and ignored.
Gold is up 30, 40%...
I suspect it is the Dollar that is now worth less.
Not that the used cars are worth more...
Stock up on oil pumps for that 304. There’s only one company still making them, the external oil pump is a weak point in the AMC-V8 design (it was at one point considered a consumable by the company) and as far as I know there is exactly one factory in the world still making them. It is a Crown Automotive plant in Israel, and it has already been hit by a Pali rocket once, causing it to have to be rebuilt - stopping production for a couple years back in the late 2000s.
Or LSx swap the thing.
It’s supply vs demand.
the demand is there, the supply is not..............
Thanks for the advice.
304 anything seems problematic at times.
I had no idea but not surprised.
Wow. Nice.
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