Used car prices could grow volatile late in 2023. This summer, they remained relatively high, as dealers were short on used cars to sell. But an important signal suggests they could come down soon.
The wholesale prices dealers pay at auction for the used cars they later sell have started to fall.
The Manheim Used Vehicle Value Index tracks the prices dealers pay for used cars at auction. It is a product of Kelley Blue Book’s parent company, Cox Automotive.
After increasing through September, the index has declined through the first two weeks of October. Dealers are now paying 3.3% less, on average, than they did a year ago.
Wholesale price trends tend to become resale price trends after six to eight weeks.
The trend isn’t the same for every type of vehicle. Pickup trucks saw wholesale prices rise 0.4% in early October. But, in every other segment of the market, prices dropped.
Analysts expect used car prices to remain historically high for several years.
Automakers built about 8 million fewer cars during the pandemic. Used car inventories could remain low for years as those cars never find their way to the used market, keeping prices higher than Americans had grown accustomed to.
But we may see a drop from current levels as 2023 ends.
