Wholesale used car prices see slight drop so far in February

In the first half of February wholesale used vehicle prices dipped slightly compared to January on a seasonally adjusted basis.

By the numbers: The Manheim Used Vehicle Index, which tracks prices that car dealerships pay for used cars at auctions, declined 1.1% month-over-month and dropped 0.2% against February 2024.

• Typically, February marks the start of wholesale price appreciation as dealers begin stocking up for the spring selling season. But this year, prices aren’t rising as quickly. 

• In the first half of February, Manheim’s Three-Year-Old Index inched up just 0.1%, a much smaller increase than in past tax refund seasons. 

• Sales conversion rates (the percentage of vehicles listed at auction that actually sell) hit 59.7% by mid-February, up from 57.9% last year and above pre-pandemic levels

So, what's going on? The biggest factor seems to be the mix of vehicles available. Due to pandemic-era production shortages, there are fewer of the highly desirable, late-model vehicles that dealers typically rely on. Instead, older cars and higher-mileage units are making up more of the inventory, which could potentially be keeping prices somewhat stable. 

But as a result—dealers are willing to pay above MMR (Manheim Market Report) values for low-mileage, retail-ready vehicles. Over the first 15 days of February, MMR Retention averaged 100.1%.

By segment: Compact car sales dropped by 0.8% compared to January. Midsize cars were down 0.7%. SUVs also declined 1.1% and pickups fell 0.3%, while the luxury segment dropped by 1.3%. Non-EV declined 0.9% with EVs shrinking by 0.4%.

Bottom line: Typically—tax refund season helps boost sales (and wholesale auction prices), but this year the refund amounts so far—are a bit lower than last year. Dealers are likely to see a gradual increase in buying as consumers get their refunds, but it might take a little longer than expected. Meaning—the dip in wholesale prices is likely just a temporary slowdown. If demand picks up in the coming weeks, wholesale prices will likely rise.

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