Wholesale used vehicle prices fell again last month

For the entire month of June, wholesale used vehicle prices fell by 0.6% from May when adjusted for seasonality.

By the numbers: The Manheim Used Vehicle Index, which tracks prices that car dealerships pay for used cars at auctions, was down 8.9% from this time a year ago.

• The Three-Year-Old Index fell by 1.5%. That might not sound like much, but typically during this time of year, the index only dips by 0.5%, meaning used car values are depreciating at a much higher rate than usual.

• The average daily sales conversion rate was 57.4, higher than expected, but still below the June 2019 average of 60.7%. For the past two years, the average rate in June has been 51.4%.

• Manheim Market Report (MMR) Retention, which measures how closely average auction transaction prices align with MMR values, averaged 97.8%, almost a full percentage point lower than in May.

Key quote: “Wholesale value declines have been stronger than we normally see for much of the last two months,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. “However, even though much of the industry was feeling the retail sales disruptions caused by the CDK outages in the latter part of the month, Manheim started to see wholesale price declines decelerate, ending the month at a seasonally normal pace.”

What’s keeping wholesale prices down? The usual suspects – high new car inventories, greater factory incentives, and falling new car prices are pulling more consumers to the new car market. It’s a classic case of supply and demand. 

What’s more: Estimated retail used-vehicle sales in June decreased 5% month-over-month but are up 3% from a year ago. Due to relatively flat sales, days' supply of used vehicles ticked up to 48 days in June, 3 days higher than in May but on par with April’s numbers.

By segment: Compared to June 2023, pickups were the only segments that outperformed the industry, down only 8.3%.

• SUVs declined by 9.3% year over year.

• Luxury vehicles fell 9.9%

• Midsize cars were down 11%.

• Compact cars were again the worst-performing segment, falling 12% compared to last year.

Bottom line: Car buyers will likely see used car prices decline as wholesale prices trickle down to the retail side. It’ll be a welcome sight for American wallets after the huge pandemic spike in both new and used cars that put a heavy strain on household budgets. It appears like the used car market is undoing some of that damage at a faster pace than the new car segment.

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