A pedestrian walks past a certified pre-owned car sales lot on January 12, 2022 in Alhambra, California.
Frederick J. Brown | AFP | Getty Images
DETROIT — Wholesale prices of used vehicles fell last month to their lowest levels in more than a year as interest rates rose, the availability of new vehicles increased and retail sales slumped amid recession fears.
Cox Automotive said Wednesday that its Mannheim Used Vehicle Value Index, which tracks the prices of older vehicles sold at US wholesale auctions, fell 15.6% from January to November, a record high. The index fell to 199.4 last month, below 200 for the first time since August 2021, and is down 14.2% from the same month a year ago. This marks the sixth consecutive month of decline.
The falling prices come as the availability of new vehicles continues to rise from historic lows, providing additional options for consumers and potentially better loan options from the automaker’s financial arms.
“New inventory is finally starting to build up, and that’s driving momentum in new retail sales, but that momentum appears to be at the expense of used retail,” said Cox chief economist Jonathan. It is the car buyer who is most affected by payment affordability.” smoke said tuesday during an industry update.
Retail prices for consumers traditionally follow changes in wholesale prices. That’s good news for potential car buyers, but not so good news for companies like the beleaguered retailer. caravan from which vehicles were purchased at record high And now trying to sell them at a profit.
Retail pricing has not dropped as fast as wholesale prices so far, as dealers attempt to hold on to record-high pricing. According to the latest data, Cox reports that the average listing price of a used vehicle was $27,564 in October, down less than half a percent from the beginning of the year.
“They don’t want to sell at low prices,” said Chris Frey, senior industry insight manager at Cox Automotive. cnbc last month, “So we’re not seeing that much drop in prices in retail.”
Cox estimates that used retail sales declined 1% in October to November and are down 10% from a year earlier.
Automakers have been grappling with semiconductor chip shortages for several years that have sporadically shut down production of new vehicles, leading to record-low inventory of vehicles and higher prices. The circumstances pushed many new vehicle buyers into the used car market.
Cox estimated last month total used market was on pace to end the year in 2021 down more than 12% from 40.6 million.