The news hasn’t been great for used car shoppers lately, but we have one positive development to report. The wholesale prices car dealers pay for the used cars they later sell to shoppers fell in October.
The Manheim Used Vehicle Value Index — an average of auction prices — fell 2.3% during the month. Kelley Blue Book’s parent company, Cox Automotive, published the index.
Related: Is Now the Time To Buy, Sell, or Trade-In a Car?
The probable end of the auto workers’ strike (“probable” because United Auto Workers union members are back at work but haven’t yet formally voted to accept the contract offers that brought them back) gets some of the credit, says Chris Frey, senior manager of Economic and Industry Insights for Cox Automotive. Had the strike dragged into November, it could have pushed up new car prices. That usually sends shoppers into the used car market with new-car money, driving prices up there as well.
Wholesale price drops usually become retail price drops after six to eight weeks. But that may not happen this time, Frey cautions. “Wholesale vehicle values typically experience some modest increases during the holiday season, and with two months remaining, we could see some upward price movements.”
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.
The price you pay can change more radically than the market average, depending on the type of car you’re looking to buy. Compact car wholesale prices fell 10.1% in October, followed by midsize cars, down 7.1%; luxury, down 6.3%; and vans, off by 5.2%. Pickup trucks nearly held steady, falling just 0.5%. SUVs fell by 3.7%.
