This year has brought mostly good news in new car pricing. But used car prices have begun to rise, and the increase may not stop for months.
The prices dealers pay at auction for the used cars they later sell increased in August.
The news comes from Kelley Blue Book parent company Cox Automotive. Cox Automotive also owns Manheim, the operator of America’s largest used car auctions. Its Manheim Used Vehicle Value Index tracks prices paid at auctions.
The index rose 1.2%, adjusted for normal seasonal fluctuations, during the month of August.
The list price of the average used car rose slightly in July, reaching $25,415. Wholesale prices have now risen steadily since early July. Dealers tend to pass those increases on to buyers – a wholesale price increase becomes a retail price increase in six to eight weeks – so further price increases are likely coming.
A slightly low supply of used cars may be to blame. The used car market’s fundamentals changed during the COVID-19 pandemic. Between 2020 and 2022, automakers built about 8 million fewer cars than they otherwise would have. Many Americans who routinely rolled one car lease into another every three years stopped that practice, buying their off-lease car at lower pre-pandemic prices.
There is, however, some good news for used car shoppers. Though prices are slowly rising, they remain below where they sat one year ago.
All major market segments experienced seasonally adjusted prices that were down year over year in August. Luxury cars saw prices 2.9% lower than in August of 2023. Midsize sedans declined by 3.9%. SUVs were down 4.3%, with pickups falling by 5.5% and compact cars declining 5.6% against the prior year.
Many shoppers are holding off on major purchase decisions, waiting out a likely interest rate cut next week and a tense presidential election.
The Conference Board Consumer Confidence Index increased by 1.4% in August as views of the present and future improved. However, consumer confidence was down 5.0% year over year. Plans to purchase a vehicle in the next six months declined compared to July to the lowest level since February.
