Wholesale used-vehicle prices reportedly saw a modest dip through the end of last month. However, it wasn’t enough to rationalize running out to the nearest automotive auction or setting up camp near your preferred dealership as you wait for the savings to come rolling in.
Cox Automotive’s Manheim Index, which tracks wholesale used-vehicle pricing for Manheim auctions, only dropped 2.3 percent in October. While that does mean rates were lower than they were in September, we’re still nowhere near the secondhand valuations seen before prices spiked in 2020.
According to Automotive News, Black Book likewise reported that “ higher than typical seasonal wholesale price depreciation resumed” in the first week of November. That means values dropped more than they had anticipated based on annual averages. While that still resulted in a weekly difference of less than one percent, it’s a steeper desperation curve than analysts had anticipated.
It’s not enough to pin anything on. But it at least suggests that demand for vehicles may be cooling off. Deciding what to attribute the change to is also exceptionally tricky. New and used pricing has been exceptionally high for quite some time, vehicle production has been tragically unreliable since 2020, and we have a large portion of the American population that’s being priced out of just about everything. However, Cox and Black Book suggested that the UAW strike’s end
probably played a meaningful role.
“The UAW strike appears to be settled, avoiding one action that could have led to higher wholesale prices,” Cox Automotive Senior Manager of Economic and Industry Insights Chris Frey said.
From Automotive News:
Had the strike lasted through the end of October or November and caused more significant depletion of new-vehicle inventory, dealers could have become more aggressive in finding used alternatives at wholesale auctions and in other channels, Cox Automotive Chief Economist Jonathan Smoke said last month during a quarterly call about the Manheim index. Periods of more intense buying by dealers can drive wholesale price appreciation.
On that call, Smoke said he is particularly focused on what impact interest rates could have in the fourth quarter and beyond. If they go up, vehicle affordability could worsen and cut into consumer demand, he said.
“It’s a very difficult kind of time to forecast exactly what’s going to be taking place,” Smoke said. “This is really something not dissimilar to the early days of the pandemic where we basically need to monitor what’s happening week to week in terms of the supply and the buying activity we see in the market and how that’s manifesting in both new and used prices.”
It’s a pretty volatile market right now and everyone but the richest families appear to be struggling financially. Meanwhile, new vehicle inventories have increased. But they’re presently hovering around 60 days’ worth of supply for most brands. That’s quite a bit higher than we’ve seen in recent years but still a bit lower than the averages seen before the pandemic. It’s also not clear how much of that supply is vehicles people want, as EVs seem to be becoming incredibly difficult to move. It’s estimated that electric vehicles (excluding Tesla models) are sitting somewhere around a 105-day supply.
By contrast, Cox estimated retail used-vehicle supply in the U.S. stood at 49 days in October. That’s down from 50 days at the end of September and down from 54 days at the end of October 2022. Perhaps the second-hand market is looking more appetizing to consumers finding new vehicles outside their price range.
But it’ll be some time before they’ll be trading anywhere near past averages. The Manheim index has increased by so much in recent years that seeing it graphed out will probably make you a little weepy. Despite prices having come down this year, the average used vehicle is still listing for just below $30,000. Compare that to the $39,000 average new vehicles we were seeing late in 2019, or the $48,000 new-vehicle average we’ve seen through 2023, and it’s clear that the auto market is still very much broken.
[Image: Gretchen Gunda Enger/Shutterstock]
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