A new Cox Automotive report reveals that the used-car market continually shrunk throughout 2022.
Using the Manheim Used Vehicle Value Index, Cox Automotive’s preferred tool for measuring price fluctuations, the company found that wholesale prices of used-cars are now down by 15.6%. However, despite lower wholesale prices, used-car retail prices have stayed largely the same, hovering around $27,564, partly contributing to a 10% decrease in retail sales volume.
Poor market performance has impacted all sectors of the car-market, although in wildly different ways. Supply chain issues, which once worked in the favor of used-car dealers by increasing manufacturing costs, have slowly resolved over the course of 2022. This has renewed consumer interest in new vehicles, at the expense of pre-owned retail.
Regardless, dealerships selling new vehicles have also struggled to maintain business despite the growth, with many automakers falling to surpass last year’s sales numbers. Even though demand has shifted, the fact remains that consumers, put on edge by recession concerns and mass layoffs, are worried about increasingly high monthly payments, leading many to wait until price tags become budget-friendly.
Throughout 2022, both new and used-car dealers have remained hesitant to lower prices in reaction to consumer demand, despite the lower sales. However, this study comes at a time of record-low confidence among usually optimistic dealers, with worries mounting that 2023 will bring new challenges to auto-retail. It the market continues to struggle into the next quarter, business owners may need to reconsider pricing to revive consumer interest.
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