Wholesale used vehicle prices dropped in the first days of February but rebounded just before March, according to the latest Cox Automotive Manheim Used Vehicle Value Index.
Preowned car prices at auction have trended steadily downward for roughly two years after reaching a peak during the latter days of the COVID-19 pandemic. However, the period since then has seen occasional jumps in wholesale values as the dynamics in the auto retail market have shifted.
After remaining flat in January, used vehicle prices at auction began to dip in the early half of February. On a year-over-year basis, the month saw wholesale values drop 13.1%. That decline can be attributed to tighter supply in early 2023, which drove costs far ahead of their pre-pandemic average. However, that strain lessened under the sharp increase in new vehicle inventory that occurred over the course of spring and summer. Now that consumer choice has widened, demand in the preowned sector has softened, allowing prices to normalize. However, while a notable annual decline in values was to be expected, the month-over-month decline was only marginal.
Compared to January, wholesale used vehicle prices dropped only 0.1% despite the rough start to the month. This is due to a sudden change of course in the latter half of February, during which Jeremy Robb, Cox Automotive senior director of economic and industry insights, recounts seeing “some of the strongest weekly gains in wholesale prices for many years.” That increase coincided with a jump in retail activity, which saw sales rise 18% month-over-month and 5% year-over-year. For comparison, January’s sales rose only 5% from December and actually declined from their year-before total.
While used vehicle values are more likely to drop in the coming months than not, the rebound in both demand and pricing seen in the latter half of February suggests that the anticipated decline may be slower than some thought. That being said, dealers should still prepare for a far more consumer-friendly market than they have seen in recent years down the road, but using the advantage that current market conditions have given them, they can use this time to focus on training and outreach.
