Wholesale used vehicle prices declined slightly in October as the market continued to fluctuate in response to the post-pandemic economy.
According to Cox Automotive’s monthly report, wholesale used vehicle prices dropped 2.3% from September and 4% from October 2022. Values, while still heavily inflated from pre-COVID norms, have varied somewhat in the preowned segment since the start of the year but have typically trended back to normal levels. This changed in August and September when prices saw marginal gains. While the positive shift may have led some to think the tides were turning back in favor of dealers, the decline of preowned car values in October signals that the downward trend is here to stay, at least for now.
The news may surprise retailers, many of whom expected the United Auto Workers strike to create conditions similar to those seen in 2020, 2021, and 2022. During that period, automaker production slowed to a crawl due to supply chain disruptions, leading to inventory shortages among new car dealers. This naturally drove wholesale used vehicle prices through the roof, making it a lucrative time to be in the preowned segment. However, the UAW strike appears to have had only a mild effect on dealership inventory, likely due to the union’s strategy of targeting factories making highly profitable vehicles. While this tactic almost certainly had a negative effect on Detroit-Three profits, dealers saw little disruption to their business. As such, the UAW strike had little, if any, effect on used vehicle values.
However, there is some good news for dealers banking on a strong holiday season. Chris Frey, senior manager of economic and industry insights for Cox Automotive, expressed optimism for used vehicle prices in the coming weeks. “Wholesale vehicle values typically experience some modest increases during the holiday season,” he stated, “and with two months remaining, we could see some upward price movements.”