Used car prices have been on the way down for much of 2024. That trend may come to an end in early fall. Car dealers paid more for used cars at auction in July than they did in June.
The average used car was listed for $25,251 in June – down about $400 from May’s price and more than $1,700 less year-over-year.
But the prices dealers pay at auction for the used cars they later sell have begun to rise.
The Manheim Used Vehicle Value Index tracks auction prices. It ticked up 0.6% in July. It’s a product of Kelley Blue Book parent company Cox Automotive.
Changes in wholesale prices tend to become retail price changes after about six to eight weeks.
Prices are rising, in part, because fewer Americans lease cars post-pandemic than before. Cars coming to the end of their lease are a critical source of used cars for sale. When those aren’t coming in, dealers have to buy more at auction.
“We are just beginning to see lower lease maturities for the key 3-year-old segment, and that impact will be felt over the rest of this year and into 2025 and 2026,” explains Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive.
The lack of leased cars meets a generally thin supply of used cars in the first place. Automakers built about 8 million fewer cars during the peak of the COVID-19 pandemic than they would have without it. That means 8 million cars that will never reach the used market, constricting supply and raising prices.
Dealers have better supply of some segments than others. Americans increasingly buy SUVs instead of sedans. That demand means sedan prices fall faster than SUV prices. Used midsize sedans saw an average auction price drop of 6% last month, while SUVS fell just 5.2%.
