Wholesale used car values normalize, but one segment is bucking the trend

Wholesale used car values are depreciating at a slower pace to round out the summer, but that doesn’t mean there’s any shortage of surprises in the market.

By the numbers: For the most part, auction prices are starting to normalize. Although preowned values fell faster than usual earlier this month, the last week saw this slow to a crawl.

• The overall depreciation rate was 0.36% for the week ending July 27, compared to 0.74% the week before. That’s closer to normal for this time of year.

• For trucks and SUVs, this amounted to a $73 price drop. In the car segment, values only fell by $53.

The intrigue: While wholesale prices started to behave normally last week, one segment stood out from the rest. Mid-size cars actually appreciated, with values suddenly jumping 0.14%. Newer models rose slightly slower than the segment average, gaining only 0.05%.

Driving the news: How did this happen? The answer is most likely affordability. As you would expect in today’s challenging market, bigger vehicles aren’t selling so well, meaning dealers aren’t willing to pay as much at auction. We can tell that by looking at depreciation rates.

• Full-size vans lost 2.59% of their value earlier this month, the biggest one-week dip of 2024. Full-size crossover SUVs saw the biggest wholesale price drop of the last seven days.

• Financing costs are also getting out of hand. Average interest rates on used cars hit 14.42% this July, up 80 basis points from last year.

• Meanwhile, Q2 saw demand soar for mid-size vehicles of all kinds. The Chevy Trax recorded a 153% increase in sales, while deliveries of the Honda Civic rose 38%.

Bottom line: We seem to be hitting a period of stability in the wholesale market but with smaller cars becoming more popular, values might start to change in increasingly unexpected ways.

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