Used car prices are trending down as the market continues to adjust after the inflated peak seen during the pandemic. According to the latest report from Manheim Consulting, which tracks wholesale used car transactions, the average price of U.S. used cars in April declined by 3 percent month on month and 4.4 percent year on year.
Data for April indicates that it’s the first time in 2023 that the index has noted a decline in used car prices. But the year-on-year decline points to a broader decrease in used car prices, with last month marking the eighth consecutive month for YoY declines.
Demand for new and used cars soared at the height of the pandemic as automakers were afflicted with supply chain problems which meant new car deliveries were throttled. In total, automakers sold 8.1 million fewer vehicles in the 2020-2022 period compared to 2017-2019. This huge difference means that fewer cars ended up in the used market.
But as the world and the automotive industry continues to get back on its feet, demand for used cars is normalizing.
Luxury vehicles saw the brunt of the decline, with the segment seeing transaction values decreasing by 9 percent. Meanwhile, pick-up trucks appeared to be the most resistant, holding on to their value and decreasing by just 0.2 percent YoY.
And it’s likely that used car prices will continue to tumble, according to Chris Frey, senior manager of Economic and Industry Insights for Cox Automotive. “During the financial crisis, we had 16 months of annualized declines, averaging 5.8%. Though I’m not predicting doom, we’ve surely started a second, and more rapid, decent off the pandemic peak of January 2022,” said Frey.
