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Used-Vehicle Prices Rise Again

February increase biggest gain for month since 2009; used retail sales fall.

March 7, 2023
Used-Vehicle Prices Rise Again

The eight major vehicle segments experienced 'significant' month-over-month price increases.

IMAGE: Pixabay

2 min to read


Used-car prices, which had been trending downward from record highs, are now headed back in the other direction.

Cox Automotive data for February wholesale used-vehicle prices on a mix, mileage and seasonally adjusted basis show they jumped 4.3%, the biggest month-over-month increase in February in nearly 15 years and the third consecutive monthly bump. The non-seasonally adjusted increase was 3.7%.

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That was down 7% year-over-year from historic highs achieved during pandemic-caused supply constraints that led to decreased production.

Increased prices, coupled with rising interest rates, don’t bode well for sales. In fact, February retail used-vehicle sales fell 5% month-over-month and 9% year-over-year.

The pressure interest rates bring to the automotive market shows no signs of easing, either, as Federal Reserve Chairman Jerome Powell advised in early March that rates will likely keep climbing because inflation deceleration has reversed.

The used-car price swells may reflect the broader economic conditions, as the Biden administration has considered them a measure of weakening inflation.

Used-vehicle prices rose during the pandemic along with those for new vehicles as consumers who’d normally buy new models switched to used to save money.

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Cox's Manheim Used Vehicle Value Index, which tracks prices of used models sold at its U.S. wholesale auctions, rose to 234.5. Retail prices typically follow wholesale price fluctuations.

The average daily sales conversion rate increased in February to 64.3%, above normal for the time of year, said Cox, which interprets that to mean sellers had more pricing power than is typical for early in the year.

The eight major vehicle segments experienced “significant” month-over-month price increases in February, Cox said, gaining from 3.3% to 5.9%.

The trend may have been reflected on some level in the Conference Board Consumer Confidence Index, which fell about 3% during the month. The index showed that views of current conditions actually improved, though future expectations decreased 8.3%, and plans to buy a vehicle in the following six months fell to the lowest level since November 2021.

LEARN MORE: Auto Shoppers' Woes to Continue in 2023

Originally posted on Auto Dealer Today

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