Cox Automotive’s Manheim Used Vehicle Value Index shows that wholesale used vehicle prices declined for the first time this year. The 3% drop from March to April 2023 is believed to be due to automakers increasing the production of new cars and trucks. Despite the decline, the index remains high compared to historical figures, with a 5.2% increase from December 2022.
Chris Frey, the senior manager of economic and industry insights at Cox, anticipates that the decline in used vehicle prices may not be over yet, as there have been eight straight months of year-over-year declines averaging 8.3%. Since the onset of the COVID-19 pandemic, used vehicle prices have been elevated due to supply chain issues and low production of new vehicles, resulting in a shortage of new vehicles and record-high prices. This led to consumers buying used vehicles, driving up prices further.

Retail prices typically follow changes in wholesale prices, so a further decline in used vehicle prices could benefit consumers. However, the tight supply of inventory may provide some price support, making it unlikely for a massive decline to occur, says Charlie Chesbrough, the senior economist at Cox.
Used vehicle prices have become of interest to investors and the Biden administration as a barometer for easing inflation. The administration attributed the rising inflation rates in the country to the used vehicle market early last year.
In February, the average listed price of a used vehicle was $26,086, down slightly from January. While the decline in wholesale used vehicle prices is a positive sign, the tight supply may continue to put pressure on prices, making it challenging for consumers to find affordable vehicles.
In conclusion, the drop in wholesale used vehicle prices is a positive development for consumers, but it is not clear whether this trend will continue. The tight supply of inventory may provide some price support, but the Biden administration and investors will continue to monitor the situation closely.