Used-Vehicle Wholesale Prices Give Up 55% of Pandemic Spike: Historic Plunge after Crazy Spike

#UsedVehicle #Wholesale #Prices #Give #Pandemic #Spike #Historic #Plunge #Crazy #Spike

results about Used-Vehicle Wholesale Prices Give Up 55% of Pandemic Spike: Historic Plunge after Crazy Spike

But the plunge in retail prices of used cars and trucks hasn’t progressed nearly as much.

By Wolf Richter for WOLF STREET.

Used vehicle prices at auctions dipped another 0.2% in January 2024 from December 2023, not seasonally adjusted, to $18,074, the lowest since March 2021, and are down $4,828, or 21.1% from the peak in May 2022, according to the Manheim Used Vehicle Value Index (red line in the chart).

The plunge has now worked off over half (55%) of the historic and ridiculous 63% spike from February 2020 through March 2022, according to data from Manheim, the largest auto auction house in the US and a unit of Cox Automotive. What everyone wants to know is how much more it will work off before prices stabilize or start rising again.

Auction prices usually dip in January from December, and so seasonally adjusted, wholesale prices remained flat in January from December, and are down by 20.8% from the seasonally adjusted peak in January 2022 (blue).

These auctions are where dealers go to replenish their inventories. Supply comes from rental fleets that sell the vehicles they pull out of service (usually between 2.5-3.5 million vehicles per year), from finance companies that sell their lease returns and repos, from corporate and government fleets, etc.

Retail prices have dropped 11% seasonally adjusted and 13% not seasonally adjusted from their respective peaks, as of December, according to the CPI for used vehicles.

They have given up about one-third of the historic crazy 55% spike from February 2020 to the seasonally adjusted peak in January 2022 and to the not-seasonally adjusted peak in July 2022.

But price declines hit a low in March 2023, then bounced off, then fell again later in 2023, and in late 2023 started ticking up again, in a marked disconnect from wholesale prices:

Wholesale prices have now given up 55% of their pandemic spike, while retail prices have only given up 36% (both not seasonally adjusted), and haven’t even made it back to the lows of early 2023, and then they ticked up again:

Inventories are rising, supply is ample.

Used retail inventory rose to 2.39 million vehicles on dealer lots at the beginning of January, the latest estimates from Cox Automotive, compared to a range of 2.8-3.0 million in 2019. Supply at the end of January was 53 days, according to preliminary estimates by Cox Automotive, up from 49 days a year ago.

So there’s not a glut of vehicles sitting on dealer lots, but inventories are ample and rising. And it looks like enough consumers are still on buyers’ strike, and that’s what it takes to put a lid on these still crazy prices.

Used vehicle retail sales in January rose 5% seasonally adjusted from December, but were down 3% year-over-year, according to preliminary estimates by Cox Automotive.

For the year 2023, used-vehicle retail sales inched up a hair, to 19.1 million vehicles (by contrast, new-vehicle sales jumped 12% to 15.5 million units, still much lower than back in the year 2000).

In 2021, when new vehicle sales collapsed due to the shortages, used-vehicle retail sales rose to 21.2 million vehicles, the highest in the data we have, while prices spiked ridiculously:

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

Thank you for reading Used-Vehicle Wholesale Prices Give Up 55% of Pandemic Spike: Historic Plunge after Crazy Spike

Leave a Reply

Your email address will not be published. Required fields are marked *