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Used cars are seen at the location of a Roger Paisley South dealership on June 7, 2023 in Austin, Texas.
Brandon Bell | Getty Images
DETROIT — Wholesale used car prices posted their biggest drop last month since the start of the coronavirus pandemic, with prices set to stabilize through the second half of this year.
Cox Motors I mentioned Monday A decline of 4.2% from May to June in the used car value index in Mannheim to 215.1. It marks the third consecutive monthly decline and one of the index’s largest monthly declines on record, according to Cox.
“It appears that auction buyers have taken an early summer vacation, and while used retail inventory has improved over the past several weeks, we expect less volatility in wholesale price movements through the end of the year,” Chris Fry, Cox’s senior director of economics and industry insights, said in a statement. statement.
The index, which tracks vehicles sold at wholesale auctions in the US, is still up from historical levels but down 10.3% compared to June 2022.
This drop could help lower used car prices for consumers in the coming months, as retail prices traditionally track changes in wholesale prices.
The retail used car market remains strong, but was estimated to be down 6% last month compared to June 2022, according to Cox. The decline was driven by increased availability of new cars as well as higher interest rates, Cox chief economist Jonathan Smoak said Monday during a conference call.
“We are now at a tipping point where the market returns to more equilibrium, and this equilibrium market is likely to offer small but predictable changes in sales and less news about large price changes,” Smoke said.
Used car prices have skyrocketed since the early days of the coronavirus pandemic, as the global health crisis combined with supply chain issues brought new car production to a sporadic halt. This led to reduced supply of new cars and record high prices amid resilient demand. Costs and scarcity of inventory have driven consumers into the used car market, driving up those prices as well.
Cox Automotive expects wholesale used car prices to decline approximately 1.1% at the end of this year compared to December 2022. This is less than the company’s initial forecast of a 4.3% decline, as pricing and demand were more resilient than expected for the start of the year. .
“The consumer is hanging in there,” said Smoke. “We don’t expect the remaining months of the year to see declines like we saw in the spring.”
Cox expects the used car wholesale market to see a “slow and gradual recovery” in prices to pre-pandemic levels by 2028.
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