The haywire period in used-vehicle prices may finally be coming to an end.
Why it matters: The pandemic's supply chain disruption turned price expectations upside down, sending used-car values upward in a shocking twist for something long considered a depreciating asset.
Driving the news: Wholesale used-vehicle prices — what a dealer pays at auction — fell 4% in August, compared with July, according to Cox Automotive's Manheim Used Vehicle Value Index, the monthly benchmark widely used to gauge used price movement.
- At 210.8, the Manheim index marked its sixth decline in the last seven months and its lowest point since December.
- "The number came down like a rock this month," Chris Frey, an analyst for Cox Automotive, tells Axios.
The big picture: Wholesale price movement typically precedes retail price movement, meaning used-vehicle prices could soon experience declines.
- Analysts say concerns about the economy and rising interest rates have dampened demand.
- "There’s some trepidation in the market overall," Frey says. "That’s essentially what’s causing the used market to slack off a little bit."
State of play: SUVs — the most popular segment of vehicles — posted a 4.3% year-over-year decline in wholesale prices, according to Manheim.
- And used-vehicle inventory has ticked upward from 21 days at the end of August 2021 to 47 days at the end of August this year.
Yes, but: Overall used-car prices averaged $33,414 in August, according to car-shopping app CoPilot. That's about 34% higher than "projected normal levels," absent the pandemic's supply chain mess limiting the output of new vehicles, according to CoPilot.
- "Last year was outrageously volcanic — explosive with price gains," Frey says. "This year, it seems that things are mitigating. They’re turning back to normal."
(Disclosure: Cox Automotive is part of Cox Enterprises, which recently acquired Axios.)
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September 09, 2022 at 04:32AM
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