The Manheim Used Vehicle Value Index, which tracks the wholesale prices auto dealers pay at auction, fell 1% after adjusting for normal seasonal fluctuations. The index is a product of Kelley Blue Book’s parent company, Cox Automotive.
A drop in wholesale prices generally heralds a drop in retail prices. The average used car sold for $27,246 in March, a third straight month of falling prices.
Prices are still historically high – 14.1% more than in April 2021. Virtually all types of vehicles are more expensive now than a year ago, with the exception of pickup trucks, which saw a drop of 0.2% year over year.
But analysts believe the price decline may not last long. The IRS is behind its usual pace of issuing tax refunds this year, which means a normal spring rebound in used car sales should occur later this year.
Charlie Chesbrough, senior economist at Cox Automotive, explains: “The anniversary of the chip shortage – when prices started to soar – is approaching. Year-over-year growth rates will come down to earth. However, the prices will not turn negative. Instead, they should return to more normal growth patterns, but from a higher base.