The prices dealers pay for used cars are climbing, which will likely mean a similar spike in the prices consumers pay. Wholesale used-vehicle prices on a model mix-, mileage-, and seasonally adjusted basis increased 5.87% month over month in March.
The prices of used vehicles traditionally climb as newer cars with more comprehensive features reach the used market. The Manheim Used Vehicle Value Index — a tool that eliminates that factor so that prices more accurately reflect market conditions — rose 26.2 percent to set a record high. Cox Automotive, the parent company of Kelley Blue Book, publishes the index.
“It is not uncommon to see a spring bounce in wholesale prices, but a 26.2-percent increase is a leap by any measure,” said Cox Automotive Chief Economist Jonathan Smoke. “We continue to experience high demand and limited supply. And, as we begin to see the light at the end of the tunnel that is the coronavirus pandemic, increasing consumer confidence and decreasing unemployment create market conditions that lead to sizeable price gains in the first quarter.”
Nationwide total used-vehicle sales were up 117 percent over March 2020 when COVID-19 shutdowns were at their peak. Used-vehicle inventory is tight. Used vehicle retail supply ended March at 29 days, well below the normal level of 44 days, using a rolling 7-day average.
These conditions come as many buyers have additional money to spend thanks to government economic stimulus programs, which could drive prices even higher.
