Used vehicle prices fell last month for the first time in 2023 - CNBC

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A used car dealership is seen in Annapolis, Maryland on May 27, 2021, as many car dealerships across the country are running low on new vehicles as a computer chip shortage has caused production at many vehicle manufactures to nearly stop.

Jim Watson | AFP | Getty Images

DETROIT – Wholesale used vehicle prices declined last month for the first time this year, as automakers increase production of new cars and trucks.

Cox Automotive reported Friday a 3% decline from March to April in its Manheim Used Vehicle Value Index, although levels remain elevated compared with historical figures.

The index, which tracks vehicles sold at its U.S. wholesale auctions, is still up 5.2% from December but is down 4.4% from April 2022.

"We've experienced eight straight months of year-over-year declines, averaging 8.3%, and it's likely not over yet," Chris Frey, Cox senior manager of economic and industry insights, said in a release.

Used vehicle prices have been elevated since the start of the coronavirus pandemic, as the global health crisis combined with supply chain issues caused production of new vehicles to sporadically idle. That led to a low supply of new vehicles and record-high prices amid resilient demand. The costs and scarcity of inventory led consumers to buy used vehicles, increasing those prices as well.

Further declines could help bring used vehicle pricing down for consumers, since retail prices traditionally follow changes in wholesale prices.

Cox reports the average listed price of a used vehicle was $26,086 in February, the most recent data available, down slightly from January.

"Prices have been falling, but the tight supply might be providing some price support," said Charlie Chesbrough, Cox senior economist. "Used prices may fall further, but it seems unlikely a massive decline will happen given the supply situation."

Used vehicle prices have increasingly become a point of interest for investors and the Biden administration as a barometer for easing inflation. The administration early last year blamed much of the rising inflation rates in the country on the used vehicle market. 

Correction: Cox Automotive reported Friday a 3% decline from March to April in its Manheim Used Vehicle Value Index. An earlier version misstated the name of the index.

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