Auto and Motor Vehicle Wholesalers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 5,000 auto and motor vehicle wholesalers in the US sell or arrange the purchase or sale of new and used passenger cars, trucks, trailers, and other motor vehicles to commercial dealers. They buy from dealerships and auctions and sell to other dealerships and through auctions. Firms may offer financing, reconditioning, transportation, storage, inspection, and other services.

Seasonal Demand Affects Pricing

Demand for used vehicles peaks during the summer months, with volume often twice as high as in the winter, according to the National Auto Auction Association.

Industry size & Structure

The average auto and vehicle wholesale or auction company employs about 26 workers and generates about $133 million annually.

    • The auto and vehicle wholesaling and auction industry includes about 4,800 companies that employ 125,000 workers and generate $640 billion annually.
    • The industry is concentrated; the top 50 companies account for almost 90% of industry revenue.
    • Large vehicle auction providers include Manheim (Cox), ADESA, and ACV. R. Hollenshead Auto Sales and Wholesale, Inc (RumbleOn) are the largest independent vehicle wholesalers.
    • Before the pandemic, auto auctions helped sell about 12 million cars annually.
    • Automobile wholesalers account for 54% of sales, while heavy truck, trailer and tractor wholesalers account for 8% and light truck and van wholesalers account for 18%.
                              Industry Forecast
                              Auto and Motor Vehicle Wholesalers Industry Growth
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              Jun 6, 2022 - Wholesale Used-Vehicle Prices Fall in April
                              • Seasonally adjusted wholesale used-vehicle prices (on a mix- and mileage-adjusted basis) declined 1.0% in April from March. The Manheim Used Vehicle Value Index declined to 221.2, which was up 14.0% from a year ago. The non-adjusted price change in April was an increase of 2.9% compared to March, leaving the unadjusted average price up 16.4% year over year. All major market segments saw seasonally adjusted prices that were higher year over year in April. Similar to March’s figures, vans again had the largest year-over-year performance, followed by compact cars, while pickups lagged the overall market. As consumer confidence declined in April, Manheim estimated that used retail sales declined 13% in April versus March and failed to show the larger seasonal increase driven by tax refund season.
                              • The average age of vehicles on US roads edged higher in 2021 for the fifth consecutive year, according to The Wall Street Journal. Last year, the average vehicle age hit a record 12.2 years as high prices and a short supply of new vehicles caused consumers to delay purchases. 2021 was the fifth straight year the average vehicle age in the US increased, according to new data released in late-May by research firm S&P Global Mobility. The upward pressure on vehicle ages could last into 2023, the S&P said as the auto industry continues to deal with a range of challenges – most notably an prolonged computer chip shortage – that are preventing automobile manufacturers from restocking car lots.
                              • Following KAR Global’s $2.2 billion May 2022 sale of its US ADESA auto auction business to Carvana, the parent of the nation’s second-largest auction chain no longer has a physical auction presence in the US. The sale represents a major advancement of KAR’s move away from physical auctions and toward becoming a digital marketplace for wholesale used vehicles and comes as more dealers are looking for alternatives to physical auctions. KAR CEO Peter Kelly said the company aims to become the premier digital marketplace for wholesale used vehicles and cited supply-chain issues in the auto industry as posing a continuing difficulty and reducing the availability of off-lease vehicles—a key source of vehicles for KAR.
                              • In a bid to tame inflation, the Federal Reserve raised its benchmark interest rate by half a point in early May 2022, its most aggressive move in 22 years. The US central bank also signaled further large rate hikes to come, reports NPR. The Fed’s goal is to dampen spending by making it more expensive to borrow money to purchase goods like new and used vehicles. While the Fed’s move may have little impact on the final purchase price of most new cars, it will increase the cost of monthly payments, according to Kelley Blue Book, adding that the fundamentals affecting used car prices will remain intact despite the Fed’s move
                              • The second quarter of 2022 is expected to have stronger auto sales as consumers receive tax returns three to four weeks later than normal, according to Cox Automotive. Vehicle prices are likely to remain elevated during tax refund season, then fall afterward. Vehicle supply is expected to tighten in the second and third quarters and ease somewhat in the fourth quarter.
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