Wholesale used car prices declined last month

At a glance: In the month of May, wholesale used vehicle prices fell by 0.6% when adjusted for seasonality. 

Data dive: The Manheim Used Vehicle Index, which tracks prices that car dealerships pay for used cars at auctions, was down 12.1% from the full month of May in 2023.

• For May, prices in the Three-Year-Old Index fell by 2%, dragged down by the last week of the month, echoing Black Book’s findings.

• The average daily sales conversion rate was 56.4% for the month, which is typical for this time of year.

• Manheim Market Report (MMR) Retention, which measures how closely average auction transaction prices align with MMR values, averaged 98.8%.

Key quote: “While declines in used-vehicle values overall were a bit muted in the first half of May, they picked up in the latter half of the month,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. 

“It’s seasonally normal to get some weakening in the market over the Memorial Day weekend; but this month, we experienced a little more softening in the final week. As we move into summer, used retail days’ supply remains lower than last year, which could bring in more buyers at Manheim in the coming weeks,” he added. 

What’s more: Retail used-vehicle sales in May were estimated to be 6% higher than in April and 12% higher than at the same time last year. 

• Days' supply of used vehicles dropped to 45 days in May, down from 48 days in April.

By segment: Compared to May 2023, pickups and luxury were the only segments that outperformed the industry, down 11.2% and 11.4%, respectively.

• SUVs declined by 13.2% year over year. 

• Midsize cars were down 16.3%.

• Compact cars were the worst-performing segment, falling 17.4% compared to last year.

Bottom line: Used car price declines slowed in May, then dipped faster at month's end. This could be due to a surge in lease returns at the typical end-of-lease time and an uptick in trade-ins. Yet, the supply of used cars for sale remains lower than last year, which might attract more potential buyers in the coming weeks.

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