Detroit: The wholesale prices of used vehicles in U.S. experienced a decline for the first time this year due to the increase in the production of new cars and trucks by automakers.
According to a report released by Cox Automotive on Friday, there was a 3% decrease in wholesale prices from March to April, marking the first decline this year. However, it is worth noting that compared to historical figures, the levels are still quite elevated.
The Manheim Used Vehicles Value Index, which tracks the prices of vehicles sold at wholesale auctions in the United States, is currently up by 5.2% from December, but down 4.4% compared to April 2022.
This means that the prices of used cars have been rising since the start of the COVID-19 pandemic due to the global health crisis and supply chain problems that caused a halt in the production of new vehicles.
As a result, the supply of new vehicles was low, leading to record-high prices amid resilient demand. This caused consumers to turn to used vehicles, increasing the prices of those as well.
It is hoped that further declines in wholesale prices could help to bring down the prices of used cars for consumers, as retail prices typically follow changes in wholesale prices.
In February, the most recent data available, the average listed price of a used vehicle was $26,086, which was slightly lower than that of January.
However, Cox Automotive’s senior economist, Charlie Chesbrough, noted that the tight supply of used vehicles might be providing some price support, which means that a significant decline in prices is unlikely to happen given the supply situation.
The rising prices of used vehicles have increasingly become a point of interest for investors and the Biden administration as a barometer for easing inflation.
The administration early last year attributed much of the rising inflation rates in the country to the used vehicle market. As a result, any developments in the used vehicle market will likely continue to be monitored by investors and policymakers alike.
Used vehicle prices fell last month for the first time in 2023