Wholesale Used Car Prices Tumbled in July

Used car prices have fallen in July but that may not translate into savings for drivers.
Wholesale Used Car Prices Tumbled in July
A person walks past a used car lot in Los Angeles, Calif., on Jan. 31, 2023. Mario Tama/Getty Images
Bryan Jung
Updated:
0:00

Wholesale used car prices in the United States plunged again in July, although less than that in June, according to two major indicators for the auto industry.

Used vehicle prices plunged, while a combination of high interest rates and inflation pushed car payments, maintenance, and auto insurance costs upwards.
One of the top indicators, Cox Automotive’s Manheim Used Vehicle Value Index, reported a fourth-straight monthly decline on Aug. 7.

The index was 11.6 percent lower in July compared with the same month in 2022, according to Cox.

The other indicator, Black Book’s Used Vehicle Retention Index, saw its wholesale average in July for 2- to 6-year-old used vehicles, fall by 1.4 percent.

Used Car Prices Ease for Consumers

The Manheim index, which measures wholesale used-vehicle prices by tracking vehicles sold at Manheim’s auctions in the United States, fell 1.6 percent in July.

The seasonally adjusted decline in July was “an indicator of slowing wholesale price declines, at least when compared to the month-over-month losses we’ve seen since April,” said Chris Frey, senior manager of economic and industry insights for Cox Automotive.

“Used retail inventory continues to rebuild; but with used retail sales also showing some summer strength, we do not foresee wholesale price declines of serious import through December.”

The Manheim Index said that the July decrease was softened by seasonal adjustments and that non-adjusted figures were down 3.8 percent for that month, moving it down 10.7 percent year over year.

Average non-adjusted wholesale prices for a 3-year-old vehicle, which is the most popular model sold at auctions, declined an aggregate 3.4 percent over the last four weeks.

However, the cost of financing a car and keeping it in service is rising.

“Used car prices seem to be decreasing at the wholesale level, but not necessarily translating into savings for consumers due to high interest rates and other costs associated with purchasing a vehicle,” Mike Trudeau, executive vice president of business development at Montway Auto Transport, told The Hill.

Black Book’s price index fell 2.5 points to 171.1 in July, which is 9.6 percent below where it was at the same time in 2022.

That measure is 49 percent higher than it was in March 2020 at the start of the pandemic.

Wholesale prices for most vehicle segments in July, with the exception of the mid-size car market, declined at rates “exceeding the typical pace for this time of year,” wrote Alex Yurchenko, chief data science officer at Black Book.

“We have started to see improvements in the conversion rate at auctions as remarketers were willing to lower floors,” Mr. Yurchenko said.

“On the other hand, dealers did not lower used retail prices in July even as days-to-turn metrics stayed above 50 days. We expect wholesale to continue to decline through the rest of the year.”

Available Used Car Supplies Fall as Sales Increase

Cox Automotive estimate of available used car supply stood at 46 days at the end of July, a three day decline from 49 days at the end of June and down from 54 days in the same month last year.

In contrast, Manheim’s sales and inventory data showed that wholesale supply was estimated to have finished last month at 27 days, up from 26 days at the end of June and down 30 days from July 2022’s estimate.

While used vehicle inventory remain volatile, their sales were showing some growth this summer.

On the other hand, Mr. Frey said he did not expect any wholesale price declines “of serious import” through December.

New car prices also remain high due to the slowdown vehicle production during the pandemic, which lowered inventory amid increased demand, but have since stabilized.

The average buyer paid $48,808 for a new car in June, according to an analysis by Kelley Blue Book, which is a 1.6 percent increase year over year—the smallest since the pandemic hit.
Bryan Jung
Bryan Jung
Author
Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.
Related Topics