Used car prices have been falling for several months. But the good news may be coming to an end.
The wholesale prices car dealers pay at auction for the used cars they later sell are climbing steadily. Adjusted for normal seasonal variation, dealers paid 1.8% more per car in the first 15 days of March than they paid in February.
When dealers pay more, they pass those cost increases on to buyers.
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The figures come from the Manheim Used Vehicle Value Index, a product of Kelley Blue Book parent company Cox Automotive, which tracks the prices dealers pay for the used cars they later sell to consumers.
The price of the average used car fell in February to $26,068. But signs from the wholesale market suggest that downward trend may end soon.
Prices usually increase in early March. Tax season usually prompts a used car sales surge, as many Americans use their tax returns to fund used car purchases. The 2023 tax refund season is well ahead of last year in terms of the distribution of refunds, but the average refund is down.
Our analysts tell us the March price increase may be exaggerated this year. Dealers have a thinner supply of used cars than they normally have at this time of year. Car dealers measure their stock of cars to sell in a metric called days of inventory – how long it would take to sell out of cars at today’s sales rate if they couldn’t acquire more.
As of March 13, used retail days’ supply was 38 days. That’s 11 days lower than this time last year.
New car prices, meanwhile, are steadily declining, though still historically high.
