Last month, the average car price for sale at Manheim’s Wholesale Auction 10.3% lower than in June 2022. After three consecutive months of price declines, analysts are beginning to believe that used car market is set to stable. That’s good news.
Now, the bad news: that stabilizing point doesn’t seem to be anywhere near the pre-pandemic status quo, even if it’s slightly better than the post-pandemic peaks. The culprit for the recent decline, as economists at Manheim-owned Cox Automotive sees that, improving its inventory of new vehicles along with raising interest rates. From CNBC:
According to Cox, the used car retail market remains strong but is estimated to decline 6% last month compared to June 2022. Cox senior economist, Jonathan Smoke, said the decline was due to the increasingly available new facilities as well as high interest rates.
“We are now at a turning point as the market returns to more balance, and that equilibrium has the potential to bring small but predictable changes in sales and less news on the market. major price changes,” Smoke said.
Used car prices have surged since the early days of the coronavirus pandemic, as the global health crisis combined with supply chain issues has made regular new vehicle production less than adequate. work. That led to a low supply of new vehicles and record high prices amid recovering demand. Costs and a scarcity of inventory have driven consumers to the used car market, driving prices up as well.
Cox Automotive expects used-vehicle wholesale prices to fall about 1.1% by the end of this year compared to December 2022. This is lower than the company’s initial forecast of a 4-year decline. .3% as prices and demand at the beginning of the year were more stable than expected. .
For your recall, the average price of a used car last December was $29,533 per Edmunds through CNN. That means we can expect that to drop the full $324 by the end of the year, Cox predicts — but only if the retail trend follows the wholesale trend. That used to be the general rule, although in recent years retail prices have actually increased in certain periods as the wholesale price (the amount the dealer pays) has fallen. Guess whose pocket that growing gap has gone into? Please allow Hill to spell it out for us:
“Agents don’t have to ship it. They can make bigger profits,” Claudia Sahm, a former Federal Reserve banker and founder of Sahm Consulting, said in a message to The Hill.
“Ultimately, how much inflation and prices rise – these are decisions made by businesses. She said in an interview. “You’re in a capitalist economy, so whether it’s a small business or a corporation, it’s up to them to decide when they go through with raising or lowering prices.”
In any case, Cox is not predicting another monthly wholesale drop as significant as the one that enters June and July for the rest of the year. However, it believes used prices will eventually slide back to early 2020 levels for wholesale buyers… IN 2028. Whether or not they will slide for you remains to be seen.
