Used-vehicle wholesale inventory is expected to top 12 million next year for the first time since 2019, according to Cox Automotive Chief Economist Jeremy Robb’s forecast during the Manheim Q2 call on Wednesday.
Some context: The number of cars available on the wholesale market bottomed out at 8.4 million in 2022 due to pandemic production constraints.
The rebound has been slow, from 10 million in 2023 to a forecast of 11.9 million this year.
Robb pointed out that the growth in the market for this year is coming in the second half of the year, with more rental, repos, and off-lease units entering the lane, while few dealer and factory units are available.
“The growth is there, but it’s still going to be slow and lower than pre-COVID levels for quite some time,” Robb said, noting that wholesale inventory was at 13 million in 2019.
High conversion rates: The auction lanes are busy, even after tax season, with Manheim numbers showing conversion rates at 57.5%.
Those rates are nearly 1% higher than last year.
Even with the growth in sales rates, the days of supply is up at Manheim to 26.9 days versus the 25.5 days last year.
“Conversion this high tells us dealers are still competing hard for inventory in the lane even as the tax season fades,” said Jonathan Gregory, Cox Automotive Senior Director of Economic and Industry Insights.
Three-year-olds and older units holding value: Overall values of wholesale units are running 2.4% above the start of the year after rising to a peak of 6% during tax season.
The three-year-old models are running 4% above their long-term average, selling at a price of $28,235.
Older units, 9- and 10-year-old vehicles, are 5% to 6% above their normal averages.
Conversely, the newest models, which Gregory said are most sensitive to new vehicle incentives, are only 2% above long-term averages and down from last year.
“The oldest cohorts are running the furthest from their historic norms,” Gregory said. “In a normal year, the oldest units depreciate the fastest, but this year, budget constraints demand is holding them up.”
Wholesale mix age drops slightly: The average age of vehicles sold at Mahheim peaked at 6.7 years last year.
It is down to 6.5 years, with 37% of the vehicles now 3 years and younger.
The 4- to 6-year-old vehicles share dropped 2% to 20%.
And vehicles 10 and up are about a quarter of the market.
“Younger inventory is growing again after years of stagnating and being constrained by pandemic production gaps,” said Scott Vanner, Cox Automotive Manager of Economic and Industry Insights.
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Takeaway for dealers: More inventory is expected to be available by the end of the year, but prices are remaining ahead of normal.
Cox Automotive’s forecast at mid-year is still expecting new sales to be down 2.9% from 2025, even after a 9% bump in June on the strength of hybrid sales.
Used sales are expected to be down less than 1%, and year-to-date sales are down 2%.
“Affordability drives demand for used units, but lower new car sales mean fewer trade-ins, and that means lower used sales for dealers,” Robb said.
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