After seeing unexpected increases in February and March, wholesale used vehicle prices have started to drop once more.
Cox Automotive reports that the Manheim Used Vehicle Value Index (MUVVI) fell to 231.7 from last month’s level of 238.1 by mid-April, while wholesale used vehicle prices dropped 2.7%. The firm attributes some of these decreases to seasonal adjustments, noting that non-adjusted prices had changed less than 1% between March and April 15. However, compared to the same period in 2022, both the MUVVI and pre-adjustment prices showed declines of 4% and 5.1%, respectively.
None of these changes are likely to surprise dealers. While wholesale used vehicle prices did catch analysts off-guard by making moderate gains in February and March, Cox Automotive notes that values have historically fallen at this point in the year. However, this month’s decrease of 2.7% is slightly greater than the average of 0.3% seen from 2014 to 2019. One potential reason for this disparity is the market’s irregular activity in 2021 and 2022, which broke tradition by increasing preowned car prices during the first half of April. Since values were inflated last year, a larger-than-normal annual decrease is less a sign of softening demand and more an indication that conditions are returning to their pre-pandemic state.
Another key difference between April 2022 and the present is this year’s disappointing tax season. In its report, Cox Automotive notes that the IRS has sent 1% fewer refunds than the previous year. Americans also received less money from their government in 2023, as refund amounts shrunk 9% annually. This factor could be cooling consumer demand, which would offer another explanation for the decline in wholesale used vehicle prices.
