Used vehicle demand and prices continue to decline from record highs

Dan Smith

Pedestrians pass by a certified pre-owned car dealership in Alhambra, California on January 12, 2022. Frederick J. Brown | AFP | Getty Images

DETROIT – Wholesale used car prices hit their lowest level in more than a year last month as retail sales fell amid rising interest rates, increased availability of new cars and fears of a recession. Cox Automotive said Wednesday that the Mannheim Used Car Value Index, which tracks the value of used cars sold at wholesale auctions in the United States, has fallen 15.6% from its January-November record level. The index fell to 199.4 last month, falling below 200 for the first time since August 2021 and down 14.2% year-on-year. It was the sixth straight month of decline. Lower prices are driven by a steady rise in new vehicle availability from historically low levels, offering consumers additional options and better financing options from automakers' lending arm. will be "New inventory is finally starting to build up, and that's creating new retail sales momentum, but that momentum seems to be coming at the expense of second-hand retail," said Jonathan, chief economist at Cox. It is the traditional used car buyer who will be most affected by the sluggishness.” Smoke said in an industry update Tuesday.

Consumer retail prices traditionally follow changes in wholesale prices.That's good news for potential car buyers, but not for struggling retailers and other businesses. Calvana You bought a vehicle at a record high price and are now trying to sell it at a profit. So far, retail prices have not fallen as quickly as wholesale prices as dealers try to keep them at record highs. According to the latest data, Cox reports that the average list price for a used car in October was $27,564, down less than half a percent since the beginning of the year.

Chris Frey, senior industry insight manager at Cox Automotive, told CNBC last month: "That's why we haven't seen as much of a drop in prices at retail." Cox estimates that November second-hand retail sales were down 1% from October and down 10% from the year before. For years, automakers have battled a shortage of semiconductor chips. New car production has sporadically stopped, causing record low inventories and rising prices. This situation pushed many new car buyers into the used car market.

Cox estimated last month that the overall second-hand market is on pace to decline more than 12% over the year, down more than 12% from 2021's 40.6 million units.