Wholesale used car prices dipped in February despite a late-month rebound

February’s wholesale used car market had a little bit of everything—some seasonal ups and downs, a late-month rally, and an unusually slow start to tax refund season.

By the numbers: The Manheim Used Vehicle Index, which tracks prices that car dealerships pay for used cars at auctions, decreased month-over-month, while raw, non-adjusted prices actually climbed 1.4%. Altogether, the seasonally adjusted prices increased 0.1% from a year ago.

• However, retail supply is tighter than last year, and with tax refunds trickling in, dealers started chasing more inventory—pushing prices higher by 0.2% in the last week of the month.

• In February, Manheim’s Three-Year-Old Index rose 0.5%, outpacing historical trends at this time of year.

• Sales conversion rates (the percentage of vehicles listed at auction that actually sell) hit 60.4% by the end of February, up from 57.9% last year and above pre-pandemic levels.

So, what's going on? Early-month sluggishness gave way to stronger dealer activity as retail supply remained tight and tax refunds started flowing in.

What they're saying: “With gray days and winter storms, it’s not uncommon to see some volatility in wholesale trends relative to long-term run rates in February, and that’s what we experienced over the course of the last four weeks,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. “Tax refund season drives the ‘spring bounce’ in wholesale markets, and it looks to have started off a bit slower this year before ramping up at the end of February.”

By segment:

• Luxury vehicles and SUVs held up well, rising 1.2% and 0.2% year-over-year, respectively.

• Compact cars struggled, seeing a steep 4.8% annual decline—the biggest drop among segments.

• Trucks performed best month-over-month, inching up 0.2%, while mid-size sedans and compact cars saw declines.

• EV values continued to slide, though their month-over-month performance was better than the industry average.

What’s next: With tax refund season ramping up, demand for used vehicles should continue strengthening in March. And with high-quality, near-new retail inventory tight, dealers could remain aggressive in the lanes, propping up wholesale prices in the coming weeks.

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