Upward Surge in Used-Car Prices Reversing Course
Analysts predict downward shift over the last two months will continue.

Inflation is pressuring consumers to limit spending on autos and discretionary goods.
Pixabay
Analysts expect the surge in used-car prices that contributed to increased U.S. inflation will reverse course in June, resulting in the deceleration of a closely monitored price gauge.
Despite a significant decline in the headline rate, core inflation, which excludes food and energy prices, has remained persistently high. May data shows an increase in used-car prices played a major role in keeping core inflation high, according to Bloomberg.
But leading indicators of auto prices have decreased, according to private firms, such as Manheim. The Bureau of Labor Statistics' July 12 report on consumer prices will probably report the same, finds Bloomberg Economics.
“Since Manheim prices have fallen pretty significantly, we aren’t expecting too much inflationary pressure from used cars and trucks over the back half of the year, especially since new car prices haven’t really been going anywhere,” said Justin Weidner, a U.S. economist at Deutsche Bank.
Used-car prices soared during the pandemic, leading to a greater emphasis on indicators like the Manheim U.S. Used Vehicle Value Index for early indications of market shifts. The Manheim index, which rose every month from December 2022 to March 2023, fell 3.1% in April and another 2.7% in May. An index maintained by Black Book showed similar declines in April and May. Economists suggest the trend will continue.
But Veronica Clark, an economist at Citigroup Inc., told Bloomberg that not all volatility has disappeared. She sees “some dynamics of pent-up demand and inventory rebuild” that may keep auto demand strong, and prices shifting from month to month.
Still, Bloomberg Economics suggests change is in the air. “Consumers are becoming more discerning in their spending patterns, limiting spending on both interest rate-sensitive categories such as autos and discretionary goods purchases ... With more consumers struggling to make car payments, pent-up demand for cars might not last," Bloomberg Economics reported.
Other categories in the inflation index also point to lower inflation ahead. The consumer price index's largest component, rents, saw smaller monthly increases in May than much of 2022. Experts predict further slowing down in the months to come, Bloomberg noted.
Increases in services prices, excluding rents, are also slowing. The 12 months through May saw a rise of 4.6% in services prices, which marks the smallest annual increase in 15 months.
Originally posted on Auto Dealer Today
More Auto Finance

Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Porsche Financial Services Shifts Structure
After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
New Cars a Tad More Affordable
May averages show that combined circumstances gave auto consumers slightly better buying power for the month, though average prices were up year-over-year.
Read More →
First-Quarter Sees Long Auto Loan Growth
Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.
Read More →
Mastering Credit Friction
In this video, Josh Krach explains how to turn credit friction into an advantage.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Auto Lenders, Consumers on a Tightrope
April borrowing data shows that more consumers are bending over backward to buy vehicles, though subprime lending cooled off for the month.
Read More →
Toyota Financial Services President Replaced
Scott Cooke has served in various roles with Toyota Financial Services for over 20 years, including president and CEO, which he retires from on June 30.
Read More →