Used vehicle sales and pricing have weakened in the final quarter as the market continues to normalize in the wake of the COVID pandemic.
According to Cox Automotive, wholesale used vehicle prices have declined in the first half of November, although supply has remained relatively low, falling 1.6% month-over-month and 5.3% year-over-year. In late 2022, the preowned segment was still benefitting from inventory shortages in the new car market, which would ultimately keep values inflated until a surge in OEM production this spring. Since then, wholesale prices have mostly trended downward with the occasional spontaneous jump.
By segment, compact and midsize cars saw the most significant declines in value from last year, falling 10.7% and 8%, respectively. Pickups and SUVs retained their values the most, depreciating only 4.2% and 4.8%. On a month-over-month basis, luxury vehicles were the only segment to see stronger pricing, with values rising 0.3% in the first half of November.
Sales of certified pre-owned (CPO) vehicles also weakened in October. The segment demonstrated surprising strength in the first half of the year and, year-to-date is still roughly 8% ahead of its pace in the latter half of 2022. However, after reversing course in August, demand has now been on the decline for three consecutive months, with CPO sales falling 10.1% in October from September. This heavily outpaced the 0.4% decline in total used vehicle sales seen during the same period.
While conditions have fluctuated heavily in 2023, the used vehicle segment is still far more profitable than before the pandemic. However, the shifts in demand and pricing seen over October and November indicate that the market is now relapsing to pre-2020 conditions. To keep sales and revenue high in the coming months, dealers will need to ensure their storefronts and teams have access to the right tools, technologies, and strategies to pursue leads and achieve success.
