Used-car retail pricing might be dropping but new data suggests it might level out soon. Wholesale used-car prices just made a significant jump in early February and those costs will likely make their way to the end buyer. Here’s what we know, what’s so surprising, and what to watch for over the next few weeks and months.
It might not sound like a lot but when used-car prices dropped by an average of two percent in November of 2022, it was a big deal. Falling a further three percent in December sparked off an uptick in sales during January. Now, it’s looking like that created a vacuum of sorts at the wholesale level where prices jumped up in February.
According to a study from Cox Automotive and Manheim, wholesale used-car prices shot up 4.1 percent from January in the first 15 days of February. The mid-month Manheim Used Vehicle Value Index also rose to 234. That’s still lower than it was last year at the same time but it’s trending upwards.
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Generally, used-car retail prices are still lower across the board than last year. Trucks performed the best but were still down 4.2 percent while luxury cars and SUVs saw dips of 10.4 percent and 8.9 percent respectively. At the same time, each segment saw an increase in price compared to January. The data seems clear. Used-car retail prices are still low for now, but they may not stay that way.
Ultimately, it’s going to be a few more weeks or even a month or two before we start to see the overall outcome of this price bump. Dealers are undoubtedly working hard to secure enough inventory to make the most of the spring sale season. At the same time, many consumers held off buying used vehicles until recently due to their unusually high prices.
Dealers will have to find a balance between getting every last cent that they can and making sure that their pricing is competitive enough to draw attention and ultimately close some sales.
