CAA Automotive Market Analysis 2 — Questions and Answers
Question 1: An appraiser notices that the Manheim Used Vehicle Value Index rose 4% over the past quarter. What does this most directly indicate?
- Wholesale used-vehicle prices increased on a mix- and mileage-adjusted basis (Correct answer)
- New-vehicle MSRPs increased by 4%
- Retail used-vehicle sales volume increased by 4%
- Dealer inventory levels increased by 4%
Correct answer: Wholesale used-vehicle prices increased on a mix- and mileage-adjusted basis
The Manheim Index tracks wholesale used-vehicle prices adjusted for mix, mileage, and seasonality.
Question 2: Which metric best describes how many days current used-vehicle inventory would last at the current sales pace?
- Turn rate
- Days' supply (Correct answer)
- Absorption ratio
- Holding period
Correct answer: Days' supply
Days' supply divides current inventory by the daily sales rate to estimate how long stock would last.
Question 3: When days' supply for a specific model is very low compared with the market average, an appraiser should generally expect:
- Falling transaction prices
- No effect on price
- Upward pressure on prices (Correct answer)
- Higher incentives from manufacturers
Correct answer: Upward pressure on prices
Scarce inventory relative to demand tends to push prices up.
Question 4: A convertible appraised in late autumn in Minnesota will most likely show which market effect?
- A seasonal premium due to holiday demand
- No seasonal effect because convertibles are niche
- Higher value than in spring because of lower supply
- Softer demand and lower value than in spring (Correct answer)
Correct answer: Softer demand and lower value than in spring
Convertibles typically see weaker demand in cold months in northern markets, depressing value.
Question 5: Which data source best reflects what dealers actually pay to acquire used vehicles?
- Wholesale auction transaction data (Correct answer)
- Retail asking prices on consumer listing sites
- Manufacturer MSRP sheets
- Private-party classified ads
Correct answer: Wholesale auction transaction data
Auction sale results capture real wholesale acquisition prices paid by dealers.
Question 6: Why should an appraiser treat online asking prices with caution when determining market value?
- Asking prices are always lower than sale prices
- Asking prices are not completed transactions and may exceed actual selling prices (Correct answer)
- Asking prices exclude dealer markups
- Asking prices are regulated by state law
Correct answer: Asking prices are not completed transactions and may exceed actual selling prices
Listings reflect seller expectations, not consummated sales, and often exceed final transaction prices.
Question 7: A sharp rise in gasoline prices is most likely to affect which segment's used values negatively?
- Compact hybrids
- Subcompact sedans
- Large full-size SUVs and V8 pickups (Correct answer)
- Battery-electric vehicles
Correct answer: Large full-size SUVs and V8 pickups
High fuel costs reduce demand for fuel-thirsty vehicles, lowering their resale values.
CAA Automotive Market Analysis 2
An appraiser notices that the Manheim Used Vehicle Value Index rose 4% over the past quarter.
What does this most directly indicate?