The Used Vehicle Price Index is a time-series measurement of wholesale used vehicle prices for vehicles up to eight model years in age. Indices are created at a market and individual segment level.
Index data reflects price movement for a fixed pool vehicles (or the “same” vehicles), with changes based predominantly on contemporary and expected market conditions. This is accomplished by calculating the monthly change in price for individual vehicles and then indexing and volume weighting up to the industry and segment levels. This process eliminates nearly all bias that could come from fluctuations in vehicle age (e.g., more younger vehicles entering the market) or vehicle mix (e.g., more expensive trucks entering the market).
For example, in a standard basket approach, if in January there is a 50% mix of inexpensive small cars and a 50% mix of expensive large SUVs, and in Feb the mix of small cars increases to 60%, a basket index will show a decline in prices when prices may or may not have declined. This bias can be limited by mix adjustments, but the amount removed depends on the performance of the mix adjustments and it is never removed entirely.