A report from Cox Automotive shows a strong demand for used vehicles in January, leading to the largest increase in wholesale values since late 2021.
A recent report from Cox Automotive shows strong demand for used vehicles in January, leading to the largest increase in wholesale values since late 2021. The Manheim Used Vehicle Value Index was down 12.8% from the previous year, but increased 2.5% compared to December. The increased demand was due to unseasonably high demand and was also noted as a barometer for easing inflation.
Record High Used Vehicle Prices
The Manheim Used Vehicle Value Index saw a 15% decline in the past year as buyers held off purchasing a used vehicle due to record-high prices. The average listed price of a used vehicle was $27,143 in December, a 4% decrease from the previous year. Retail prices for consumers are said to follow changes in wholesale prices.
Stabilization of the Used Vehicle Market
The research firm stated last month that the used vehicle market has stabilized, resembling its pre-pandemic normal, with inventory holding steady and prices declining from their record highs. Wholesale prices on the Manheim Used Vehicle Value Index are predicted to decrease 4.3% from December 2022.
Used vehicle prices have been elevated since the start of the coronavirus pandemic. The global health crisis, combined with supply chain issues, caused production of new vehicles to sporadically idle, leading to low supply and record-high prices amid resilient demand. This shortage of new vehicles led consumers to buy used vehicles, causing a price increase in that market as well.
The January used vehicle market showed a larger-than-expected increase in the Manheim Used Vehicle Value Index, resulting from unseasonably high demand. The used vehicle market has stabilized and prices are predicted to decline in 2023. The elevated prices of used vehicles can be attributed to the impact of the coronavirus pandemic on production and supply chain issues.