DETROIT — Used vehicle prices are expected to fall more than expected this year as high gas prices and higher inflationary costs hit Americans’ wallets.
Cox Automotive on Wednesday lowered its forecast for the company’s Manheim Used Vehicle Value Index to an increase of 0.2 percent from 2 percent previously.
The downward forecast follows a 0.6% drop in the index in September, which marked the first time since the start of last year that the monthly index was no higher than a year earlier.
The historical average for the Manheim index is about 2.3% year-over-year, but last year it rose just 0.4% after a historic price surge during the coronavirus pandemic earlier in the decade.
Unadjusted wholesale prices for used vehicles fell 1.2% year-over-year in September and 1.3% from August, with depreciation accelerating in the third quarter.
“The first half of the year actually showed more appreciation than usual, even in the face of rising fuel prices. But with the conflict in the Middle East continuing, diesel prices at record highs and interest rates rising rapidly, increasingly worrying businesses and consumers, wholesale prices have felt the pinch,” Cox Automotive chief economist Jeremy Robb said in a statement.
The index is a closely watched indicator of used vehicle prices that tracks prices of used vehicles sold at Manheim’s wholesale auctions in the United States. Retail prices for consumers traditionally follow changes in wholesale costs.
Cox noted that electric vehicle sales and off-lease vehicle volume continued to grow, reshaping the dynamics of the used vehicle market as the value of electric vehicles and smaller, fuel-efficient vehicles increased during the quarter. That compares to the poor performance of large trucks and SUVs, the company said.
The juxtaposition between smaller, fuel-efficient cars and larger vehicles occurred as the national gasoline average in September was $4.33 per gallon. That’s 50 cents higher than the previous September record of $3.83 set in 2023, according to AAA.
Cox said retail demand for used vehicles is relatively healthy, but the price changes appear to indicate that dealers have reached a ceiling on what they can charge consumers.
The average list price of a used vehicle was $27,239 in August, according to Cox. This compares to new vehicles whose average price exceeds $50,000.
The majority of American consumers buy used vehicles because they are more affordable than new models.
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