Auction Retention Index – ARI


The Auction Retention Index is a good indicator of market stability.

Theoretical retention is at or around 100%, but with market turbulence, this index can greatly fluctuate. 

If the index is under 100%, wholesale inventory is being transacted below the target price, meaning cars are cheaper than they normally should be. 

For example, a 2018 Honda Accord should fetch $16,000 on the wholesale market, if the retention index is 92%, this vehicle is likely to bring $14,720. 

After a sharp index decline, a period of recovery is usually witnessed as prices correct and the index may be higher than 100%. 

There are make/model specific indexes as cars depreciate differently depending on the segment. Below is a chart showing the overall auction retention index from February 2020 to September 2020. Notice the COVID-driven sharp dip between March and May 2020. 

 

The top 10 car makes for sale currently at U.S. auctions are:

Make  Vehicle Count 
BMW                              4,765
Mercedes-Benz                              4,948
Hyundai                              5,120
Dodge                              5,548
Honda                              5,676
Jeep                              6,434
Toyota                              9,912
Nissan                           10,762
Chevrolet/GMC                           18,847
Ford                           24,032
Total                            96,044

Analysis of the Auction Retention Index:

As of Sept 24, 2020.

Vehicles for Sale: 96,044
Vehicles for Sale, Buy it Now: 44,604

Buy It Now 100.0%                   44,604
ARI < 90%  15.1%                      6,755
90%<ARI<100% 10.0%                      4,442
100%<ARI<110% 29.2%                   13,007
ARI>110% 45.7%                   20,400
     
ARI < 100% 25.1%                   11,197
ARI > 100% 74.9%                   33,407