Wholesale used-car prices rise slightly in December

Wholesale used car prices rose in December, capping a year of consecutive monthly declines, according to one key indicator.

Cox Automotive on Monday tracked vehicles sold at U.S. auctions in Mannheim and the Mannheim Used Car Value Index, a measure of wholesale used car prices calculated by applying statistical analysis to those figures, was released in December. It announced a 0.8% increase from November.

Still, wholesale prices at the end of December were down 15% compared to the same period last year. These numbers are adjusted for mix, mileage and seasonality. On an unadjusted basis, the Mannheim Index fell 1.9% in December from its November level, and prices fell 13% year-on-year.

“in the meantime, [15 percent] It was the largest decline in the history of the series, compared to an overall 88% increase over the 21-month period from April 2020 to January 2022,” said senior economic and industry insights at Cox Automotive. Manager Chris Frey said quarterly on Monday. Insight Call.

Frey also noted that Cox Automotive adjusted the starting point of the Mannheim index as of the December update. Now he started in January 1997 instead of January 1995. This is a measure that “helps improve accuracy and consistency across the entire history of the data,” Frey said.

All monthly and yearly percentage changes were identical, Frey said, only the starting point of the index was adjusted.

2023 forecast

Cox Automotive chief economist Jonathan Smoke said the Mannheim index could fall 6% by June if a disappointing tax refund season and peak interest rates lead to higher-than-usual depreciation during the spring car sales season. said he would.

With used car prices so high and interest rates driving up monthly payments so much, even some low-priced cars are out of reach for consumers, says Frey. said Mr.

“Once that tourniquet [of interest rate increases] Mr Frey said: “But in this case, second-hand goods are probably a bit more.”

Demand for used cars could improve steadily in the middle of the year as lower wholesale prices trickle in, creating more affordable buying opportunities, Smoke said. Consumers’ monthly payments could also smooth out once interest rates stop rising, he said.

Smoke also said it’s possible that the market remains supply-constrained and “below prices” in the same way that used-car prices have returned to some degree of normalcy. He predicted that wholesale prices could ultimately fall 4.3% from December 2022 levels by the end of 2023.