Used car prices held steady in the third quarter after dropping rapidly in the second, according to Cox Automotive’s latest Manheim report.
Rising values in September helped buoy used car prices throughout Q3. Preowned vehicles cost 1% more by the end of the month than they did in August, although the increase failed to keep prices from dropping slightly from the same point last year. Still, values in the segment declined at a much slower rate than in the first half of 2023, falling only 3.9% year-over-year in the third quarter compared to 10.1% year-over-year from January through June.
Cox Automotive chief economist Jonathan Smoke offered additional context for the discrepancies between Q2 and Q3 used car prices. “We saw a very different third quarter compared to the second quarter with the used-vehicle market swinging back and regaining a sense of balance,” he remarked. “What has been behind this improving dynamic for used-vehicle values is improving retail vehicle demand, which tightened retail supply and led to more dealers buying at wholesale.” Although Smoke acknowledged that the United Auto Workers strike could complicate the market in the final months of 2023, he still expects pricing to remain stable for the remainder of the year.
Fluctuating used car prices have been both a boon and a curse for dealers. From larger digital platforms such as Carvana and Shift Technologies to independent retailers, the uncertainty caused by the COVID pandemic has been felt to some degree, leading many businesses to rely on unorthodox methods of both obtaining and selling vehicles. However, the strengthening of prices in September is an encouraging sign for the sector. Given that new car sales and values have also held steady in recent months despite the United Auto Workers strike, it is less likely that the preowned segment’s current stability is a fluke created by temporary conditions. Should sales and values remain balanced in the coming weeks, dealers can enter 2024 with much more confidence in the market than they did in early 2023.