For months, headlines have declared that used-vehicle prices are falling because of rising new-vehicle incentives and a glut of off-lease vehicles.
But that's not what the Manheim Used Vehicle Value Index has shown. The index sat at a record high in May following months of stability near previous highs.
That puts the Manheim index at odds with other indicators. The NADA Used Car Guide Used Vehicle Price Index fell 7.6 percent in May from a year earlier. The Black Book Used Vehicle Retention Index last month reached its lowest level since November 2010.
What gives?
Tom Webb, Manheim's outgoing chief economist and creator of the index, said it comes down to differences in the indexes' methodologies. For example, the Manheim index does not factor for adjustments in new-vehicle pricing and thus tends to drift higher because of inflation and additional content on vehicles.
"Given that you had new-vehicle price increases while used-vehicle prices have stayed level, that means your residual values have declined, which is what some of these other measures are trying to get at," Webb said.
Lenders are particularly interested in trends in residual values, which can help them anticipate how much a car they lease to a customer today will be worth when the lease expires in three years.
In addition, the Manheim index analyzes prices on used vehicles of any age. The NADA Used Car Guide is restricted to vehicles 8 years and younger, while the Black Book index monitors those between the ages of 2 and 6 years.
Stable or falling
The Manheim Used Vehicle Index has shown stability in used-vehicle prices over the past year, in contrast to similar indexes.
Manheim
May 2016
124.43
June 2016
126.16
July 2016
127
Aug. 2016
126.93
Sept. 2016
126.97
Oct. 2016
126.1
Nov. 2016
124.79
Dec. 2016
124.98
Jan. 2017
124.9
Feb. 2017
124.7
March 2017
124.1
April 2017
124.7
May 2017
127.9
NADA
May 2016
119.9
June 2016
119.9
July 2016
118.9
Aug. 2016
118.6
Sept. 2016
117.5
Oct. 2016
117.2
Nov. 2016
116.3
Dec. 2016
114.8
Jan. 2017
114.3
Feb. 2017
110.1
March 2017
110.1
April 2017
109.9
May 2017
111.1
Black Book
May 2016
118.9
June 2016
118.3
July 2016
118.1
Aug. 2016
117.2
Sept. 2016
116.6
Oct. 2016
116
Nov. 2016
115.7
Dec. 2016
114.8
Jan. 2017
114.5
Feb. 2017
113.9
March 2017
113
April 2017
113.1
May 2017
112.3
Regardless of the index numbers, Webb said most indications are that the industry has been able to weather the flood of off-lease vehicles returning to market, at least for now.
"May was a little bit stronger than I would've anticipated," Webb said. "But the stability we've seen overall hasn't been surprising."
That's because dealers are still able to get customers easily financed, even as large auto lenders including Ally Financial, Capital One and GM Financial indicate they are pulling back from lending to subprime customers.
The availability of retail financing "has not been an issue, despite some of the headlines you read in the press about big lenders pulling back," Webb said. "They don't have a problem getting people financed, which is the key in a healthy market."