The price of the average used car rose last month. But the increase may be short-lived.
The wholesale price dealers pay for the used cars they later sell has crested and begun to fall.
According to the Manheim Used Vehicle Value Index, prices fell 0.6% in the last month after adjustments for normal seasonal changes. The index, a product of Kelley Blue Book parent company Cox Automotive, tracks the prices dealers pay for the used cars they later sell to consumers.
Wholesale Prices Rose, Then Retail Prices Rose
The best way to predict retail prices for used cars is to watch wholesale prices. When dealers pay more for used cars at auction, they pass price increases on to the consumer. When they pay less, they charge less.
Wholesale prices increased for much of the year. That trend showed up in retail prices last month, with the price of the average used car rising by half a percent in March. That’s likely to keep prices at used car lots inflated for at least another month as dealers sell off the cars they bought at higher prices.
Now Wholesale Prices Are Falling
But dealers paid less at auction in the first two weeks of April. That means retail prices are likely to fall once the pricier cars have all sold. That could take a month or more.
