Wholesale used car prices edge down in Sept.

In September, wholesale used vehicle prices took a slight dip, edging down 0.1% compared to the previous month.

By the numbers: The Manheim Used Vehicle Index, which tracks prices that car dealerships pay for used cars at auctions, changed direction over the last month after rising for most of the summer, indicating that overall depreciation is slowing, according to Cox Auto.

• From Sept. to Oct., prices in the Three-Year-Old Index fell by 1.6%. While a decline was expected, wholesale values usually fall more this time of year historically.

• The average daily sales conversion rate was 60.3%, which was over 2% less than in August. Yet, the conversion rate is higher than it has been over the past three years  (~53.0%).

• Manheim Market Report (MMR) Retention, which measures how closely average auction transaction prices align with market value, averaged 98.5%.

Key quote: “Retail used days’ supply remains at lower levels than the last few years, and off-lease maturities will continue to decline. The new normal is likely that we continue to see wholesale depreciation, but it may be more muted than the market is accustomed to for the rest of the year,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive.

By segment: Compact car sales rose 1.2% compared to August, and midsize cars saw a 1.2% decrease. SUVs were down just 0.3%, and pickups fell 0.6%, while the luxury segment also dropped by 1%. Non-EV declined 0.7% in September, with EVs seeing a 1% dip. Yet, all major market segments saw seasonally adjusted prices that remained lower year-over-year.

What it means: The long-term view suggests wholesale values will continue trending downward. But in the short-term, hundreds of miles of damage from Hurricane Helene likely means that many residents will need to replace their cars. 

• This could cause a surge in demand for used vehicles, which will likely push wholesale prices higher. 

• Dealers in the impacted areas will probably find themselves competing for already limited lower-priced inventory, as many distressed customers will likely be looking for highly affordable options.

Bottom line: This increased demand, combined with existing supply constraints, could drive up wholesale prices, reversing any recent price drops and creating a tougher market for some dealers.

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