Here’s What’s Happening To Used Car Values According To America’s Largest Wholesale Car Auction Network

Morning Dump Car Dealership On Western Ave

Used car values kept dropping through September, Audi considers building cars in America, Renault and Nissan might shuffle some equity. All this and more in today’s issue of The Morning Dump.

Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.

Used Car Wholesale Values Continue Slow Decline

A Buy Here Pay Here Dealer selling used cars
Photo credit: “Used car dealer in Miami” by ryantxr is marked with CC BY 2.0.

It’s early in a new month, which means it’s time to check the Manheim used car wholesale value index to see if used car values are dropping. Sure enough, the slide continues through September, with seasonally-adjusted average used car wholesale values declining three percent month-over-month and one tenth of a percent year-over-year, enough for Manheim to call it a “large decline.” From the company’s report referencing its MMR values, which are its expected vehicle values (think of it a bit like Kelley Blue Book for wholesale units):

Over the month of September, daily MMR Retention, which is the average difference in price relative to current MMR, averaged 98.4%, meaning market prices were below MMR values. The average daily sales conversion rate decreased slightly to 49.2%, which was below normal for the time of year. For example, the sales conversion rate averaged 52.1% in September 2019. The lower conversion rate indicated that the month saw buyers with more bargaining power for the time of year.

Sales conversion rate is a fairly simple figure obtained by dividing sales by number of potential customers. A lower conversion rate means that buyers are more readily walking on used cars, often due to factors like better options in the marketplace. However, not all types of cars saw a year-over-year decline in value. The report goes on:

Only three of eight major market segments saw seasonally adjusted prices that were higher year over year in September. Compact cars had the largest increase, at 5.9%, followed by vans and pickups, both of which increased by 0.8%. The remaining five segments’ prices were well below the industry, with midsize cars only minimally lower. Compared to August, all eight major segments’ performances were down. Full-size cars lost more than 14%. Pickups and compact cars declined the least, at 1.4% and 2.6%, respectively. The remaining five segments (vans, SUVs, midsize, luxury, and sports cars) lost between 3.1% and 5.2%.

To cook up the used Vehicle Value Index, Manheim takes all the cars it puts through auction, finds mean transaction prices, eliminates outliers, then adjusts for mileage, season, and vehicle mix to come up with a single figure meant to represent overall used vehicle value. The index doesn’t translate perfectly to retail prices, but it’s a great indicator of overall trends in the used car marketplace due to the sheer number of car sold through wholesale auctions.

While the index remained steadily between 135.4 and 139.6 for the first few months of 2020, it shot up like a firework starting in June of 2020, hitting peak silliness in January by topping out at 236.3. As of the end of September, the index sits at 204.5, down from 210.8 in August and just slightly down from 204.8 last September. According to Manheim, some of this slackening of the used car market can likely be attributed to stronger year-over-year new vehicle sales.

September’s total new-light-vehicle sales were up 9.5% year over year, with the same number of selling days as September 2021. By volume, September new-vehicle sales were down 1.0% from August. The September SAAR came in at 13.5 million, a 9.6% increase from last year’s 12.3 million and up 2.9% from August’s 13.1 million pace.

SAAR stands for seasonally adjusted annualized rate, or roughly the number of cars expected to be sold in a calendar year. While it’ll take a long time for used car values to return to anything resembling normal, it’s encouraging for buyers to see a steady trot back down the mountain. At the same time, if you’re looking to dump a vehicle, now might be the best time to do it. Barring any crisis, it seems that depreciation is well and truly back.

Audi Considers Its First American Assembly Plant

Static Photo, Colour: Geyser Blue, Metallic
Photo credit: Audi

The Inflation Reduction Act’s updated EV tax credit program strikes again. Automotive News reports that Audi is considering American assembly to qualify for electric vehicle tax credits.

In an exclusive interview, Oliver Hoffmann, head of technical development for Audi, said the new rules “will have a huge impact on our strategy here” in North America.

“To be honest, we are looking right and left: What can be the opportunity for us to get together with a strong [Volkswagen Group] in the background,” said Hoffman, speaking from Audi’s design center in Malibu, Calif. “And now we are on the way, especially as the rules changed and as you know there is big spending of the government for EVs, with special circumstances, and we are looking forward to how we can meet these requirements.”

Some Audi models may be easier to build in America than others. The Q4 e-tron rides on the same MEB platform as the Volkswagen ID.4, and that Volkswagen is now built in Chattanooga, Tenn. However, the midsize e-tron crossover rides on the MLB platform and the e-tron GT is on the same J1 platform as the Porsche Taycan, so neither of those even have platform mates built in existing American facilities.

Stellantis Still Smells

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Photo credit: Jeep

While most new car assembly plants are fairly clean, not all are easy to live with. The Detroit News reports that Stellantis’ Mack Avenue plant has been under fire six times in roughly 13 months for air quality violations, most recently requiring an explanation of air pollution by Oct. 14.

An EGLE official notified the plant’s manager via a violation notice earlier this week that during a Sept. 30 investigation, staff with the agency’s air quality division observed “persistent and objectionable paint/solvent and chemical odors of moderate intensity … impacting residential areas downwind of the facility which were determined to be emitting from” the plant.

The investigation was prompted by reports of “nuisance odors,” a persistent complaint of some residents who live near the facility on Saint Jean Street.

“Stellantis has been implementing corrective actions related to our Mack Assembly Plant as submitted to EGLE earlier this year,” company spokesperson Jodi Tinson said in a statement Friday. “We are investigating this recent incident and will work with EGLE to address this issue in a timely manner.”

The Mack Avenue complex, once known for building Vipers, now builds the Jeep Grand Cherokee. For the sake of area residents, Stellantis better fix this noxious odor business now. The company’s had five chances already, what will it actually take to get it right?

Renault And Nissan Might Shuffle Equity

2023 Nissan Pathfinder (1)
Photo credit: Nissan

While Renault and Nissan have been in a cozy alliance for quite some time now, it’s not always been easy or steady. The latest development is Reuters reporting that Nissan wants Renault to own less of the Japanese company.

The demands were made in exchange for Nissan agreeing to invest in Renault’s new unit being set up to house its electric vehicle (EV) assets, said the source, who sought anonymity as the talks are not public.

Renault owns about 43% of Nissan, which wants its French ally to wind down the stake to 15%, drawing level with Nissan’s share in the alliance partner, the source said.

The stake sale would not affect their business alliance and Nissan may need to raise funds to buy the shares back from Renault, the source added.

So what effect would Renault reducing its stake in Nissan have? Well, it could give Renault a liquidity injection that might be needed given the rocky European economy. It could also give Nissan the opportunity to raise funds elsewhere and carry a bigger stick in the Renault Nissan Mitsubishi Alliance. For now though, we’ll have to wait and see if and how this all plays out.

The Flush

Whelp, time to drop the lid on another edition of The Morning Dump. It’s Monday, so why don’t we play a little game? If you were given $5,000 to buy a car today, what would you get?

Lead photo credit: David Hilowitz is licensed under CC BY 2.0.

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38 Responses

  1. I’d use the $5k to pay the $5,500 bill on the CVT I just replacement in my piece of junk 2018 Nissan Altima that was not covered under warranty or use it to pay on the $13k that I still owe on the car.

    But if I had to use it on another vehicle I’d use it to buy a older 4×4 small truck like a hardbody nissan, 720, Toyota, or S10/S15

  2. There are some surprisingly decent options on my local Craigslist for $5k or less. There is a 2009 Camry with 180,000 miles that would get the nod as a daily driver. If I’m assuming I still have my current daily though, I would go with the 2007 XC70 with 200,000 miles and do my occasional hauling with a touch of class.

  3. $5000 for a car would end up being a project car. I’ve been wanting a round-eye F-series truck body to put on a Panther platform for many years now. That would go a long way towards accomplishing that

  4. Their is a base 4 cylinder Saturn Sky Roadster with just bit over 100k in my area for under 5K. I always wanted one, but not so bad I would put my own money down on one. still it would be a fun summer driver.

  5. So “MMR” is “Manheim Market Report,” which isn’t explained in the Autopian piece, which of course then goes on to discuss it gong up or down. It reminds me of perusing a menu for an ethnic cuisine where the dishes have English translations, but the translations simply repeat the basic dish foreign word name as part of the definition and tell you it’s fried or pan-seared Whatsis or with rice, you’re no wiser as to whether you’re getting a fish, chicken, or ground up broccoli. Anyway, does this mean that you can no longer buy a regular Corvette (as opposed to a Zo6 or whatever flavor of the year Chevy is coming out with next) and get your money back after driving it for a few thousand miles or make money after owning it for six months with no miles? Anecdotally from watching them on BaT, they do seem to have finally started to come back to reality for a car that’s now in the fourth model year of this generation. I also wonder when my local Ford dealer will realize it’s not getting a $1,9995 ADM (“added dealer markup”) on an Ecoboost Mustang coupe. With gas presently at $7.09 for premium locally in CA, I’m not sure the hotter models will exactly e flying off the lot either.

  6. I’d love 5k to put TOWARD something. If I had to find a sub-5k car, it would probably be a Miata, as has already been mentioned.
    Just checked my local Craigslist, and I might pick up an ’86 Porsche 944 instead. High mileage, but it looks like it would be fun.

  7. For 5k I’m getting the lowest mileage accident/flood free no salt Prius I can find for the $. That’s a lot of miles, but the things are cockroaches if you don’t salt them.

  8. $5,000 in today’s market? I’d buy an 8 to 10 year old Mini Cooper S or Mini Cooper JCW with a misfire. There are literally dozens of them in the area.

    I’d budget for 4 new ignition coils, a new VANOS actuator solenoid, both high and low pressure fuel pumps, and for a new timing chain and tensioner. Front wheel bearings, too.

    These things are a blast to drive, even with the automatic, but the little engine in there has known issues with excess slack in timing chain as they age. The tensioners are often weak, which causes excess wear in the chain, which is a little weak to begin with. Even slight unexpected timing changes will cause misfires and air management fault codes in any BMW engine.

    This is one example of where “superior” German engineering results in worse engine life. A timing belt would do just as well or better, but wouldn’t be expected to last the life of the engine. Further, it would be designed for relatively easy replacement.

    Occasionally, the misfire is caused by a crack in one the the plastic intake components, or a faulty EGR valve, but always budget for worse and be pleasantly surprised when you’re lucky.

    In a Mini old enough to buy for $5,000, I’d still replace the timing chain no later than every 120k miles. The ignition coils are also a known weakness; have a new set in the trunk ready on any road trips because they’ll start to fail at about 120k miles, too.

  9. I’m glad my one financed car will still be worth significantly more than the loan balance and I’m glad I bought my truck in March 2020 before the market went crazy.
    I’m not sure what I’d buy for $5k, possibly a dirt bike and a Beetle

    1. I bought my truck the exact same month, although I would counter the used truck market was already crazy, but I’m glad I locked in a super low interest rate.

  10. “The company’s had five chances already, what will it actually take to get it right?” The answer: Actual repercussions. I suggest a $20 billion dollar fine if they don’t fix it in a week.

  11. If I’m buying a $5k car it would be because I’m freeing up cash for other reasons. If the Mini Cooper is getting replaced (which would give me $15k cash left after purchase) – then I’d go Pontiac Vibe or Toyota Matrix in just about any trim or engine. They run forever, the rustproofing is surprisingly good, and the overall operation cost is shockingly low.

    If I have to replace MegaVan … That’s a tougher proposition. Not many usable large vans under $5k so I’d probably go with a Cadillac Fleetwood Limo from 93-96.

    1. Holy mackerel, someone should buy that Volvo before the seller comes to their senses. Unless it is a rebuilt wreck or something, $4500 for a car with less than 70,000 miles (and a nice one at that) strikes me as a steal.

  12. Detroit: We are so incredibly happy that Stellantis is (the only manufacturer) willing to invest billions of dollars to manufacture vehicles right here in the heart of the city. The tax revenue and job opportunities are an awesome windfall for our residents and our community as a whole.

    Also Detroit: Hey, the people living 90 feet from your 2.5 million square foot assembly plant are complaining it makes noise and emits “nuisance odors” What the hell are you going to do about it? This is an outrage!

  13. Shoot for $5000, you could buy my Autopian famous G35 Safari build….so I could spend $5000 and buy that Porsche 944 or a C4 Vette and do another Safari build.

  14. $5000??? Any car???

    I’ve been looking at a new (used) car, and it’s really only been $10k Cadillacs. There is not much in the $5k range I’d be interested in. Everything else is also in the $10k+ range. I think my tastes have gone up with my age. It’s hard choosing a car with poor crash possibilities at this point in life.

    I don’t know, maybe this answer is the obvious one… MIATA?
    After a quick check, it’s either ’06 or older Mustang, Pontiac Solstice, or Honda Element.

    1. Miata was the first thing I thought of. There aren’t many choices you can get for under $5k these days, but an old Miata is one of them.

      Another possibility: 1st generation Honda Insight with a failed battery. I’d totally convert that to electric.

      1. If you’re going to spend all that money on an electric conversion, why don’t you start with something better than the (truly awful) Insight?

        There are any number of drivetrain-free shells available sub $5k, and zero chance you’ll be under $5k after any BEV swap.

        1. I’m looking at the vehicle’s weight as well as its drag coefficient and frontal area. From that metric, a 1st gen Insight is among the best of choices. More range per dollar spent on battery, and it will go faster on a given amount of horsepower than a heavier, less-aerodynamic platform.

          A 300 horsepower electric Honda Insight with a Tesla Model 3 drivetrain could have acceleration and top speed performance bordering on that of a hypercar. There are a lot of choices that would take twice as much power to do that.

          1. And yes, the conversion would cost closer to $25k, than $5k. But as far as the chassis goes, the Insight would be a good one for this, and ones with inoperable batteries or blown engines can be found for well under $5k.

      2. Miata in one hand, Honda Insight in the other…..? I’d still go with the Miata. I wish there was a BEV for $5k or less, cause I’d own it. Even the OG Bolt is over $20k now, when it was less than $20k a bit over a year ago, which would have been a win for me. I can deal with the battery issues.

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