Replay Available: Q4 2025 Manheim Used Vehicle Value Index Call

A replay of the Jan. 8 Q4 2025 Manheim Used Vehicle Value Index call is available, during which Cox Automotive economists Jeremy Robb, Jonathan Gregory and Scott Vanner reviewed the latest Manheim Used Vehicle Value Index and the key economic and industry trends shaping the quarter. Grace Huang, president of Cox Automotive Inventory Solutions, provided an update on Manheim’s priorities for 2026; the announcement directs readers to the detailed trends report and press release and notes the next quarterly call on April 7, 2026.

Analysis

Market structure: The Manheim index is a leading signal for residual values that flow through OEM financing, dealer inventory margins, and auction operators. A sustained move >3% QoQ in either direction will materially shift dealer gross margins (±$300–$800 per unit) and change incentive posture at OEMs within 1–3 months, benefiting auction/remarketing platforms (KAR, CPRT) on rising values and hurting high-turn retail platforms (CVNA, KMX) on falling values.

Risk assessment: Key tail risks are a rapid influx of lease returns (waves of 2022–23 leases) that could drop used values >8% in six months, or a credit shock that spikes delinquencies and repossessions improving supply; either scenario would stress auto ABS and captive finance (F, GM financial). Monitor near-term catalysts: Manheim releases (next Apr 7), BLS CPI auto components, and monthly fleet lease return schedules — thresholds: index drop >5% or retail days’ supply >60 should trigger defensive moves.

Trade implications: Favor long, liquid auction/remarketing exposure (KAR, CPRT) and selective resilient dealer franchises (KMX, AN) if index stabilizes or rises ≥2% in next 90 days; hedge with short exposure to high-cost, high-leverage retail disruptors (CVNA) and unsecured subprime originators. Use 3–6 month option structures: buy 3-month puts on CVNA 10–15% OTM if index declines ≥3%, or buy 3-month call spreads on KAR 0–20% OTM on an index uptick.

Contrarian angles: Consensus may over-penalize EV residuals — if EV resale values decouple and stabilize (battery warranty, service programs), auto retailers with strong CPO EV programs (LAD, KMX) could re-rate quickly; conversely, auction volumes rising could temporarily hurt per-unit prices but improve auction margins via higher fee capture. Consider asymmetric bets where a 2–3% allocation buys optionality (calls on KAR/CPRT or long dealer equity) rather than large directional exposure.

Key Decisions for Investors

• Establish a 2% portfolio long in KAR (KAR) and 1.5% long in Copart (CPRT) using cash or long-call spreads (3–6 month expiries) if Manheim index shows ≥2% QoQ improvement by Apr 7; target 12–18% upside in 3–6 months, stop-loss at -10%.
• Establish a 1–2% short or buy 3-month puts (10–15% OTM) on Carvana (CVNA) if Manheim index falls ≥3% QoQ or retail days' supply rises above 60; take profits on 30–50% option move or cut at -100% premium loss.
• Implement a pair trade: long 2% CarMax (KMX) vs short 2% CVNA to capture relative resilience; rebalance after Apr 7 print and unwind if spread narrows <5% within 60 days.
• Allocate 1% to an options volatility play: buy 3-month call spreads on KAR (0–20% OTM) ahead of Apr 7 to capture positive surprise in used values, and buy 3-month puts on CVNA (10–15% OTM) concurrently to hedge downside risk from value deterioration.