Used vehicle prices swing higher amid unseasonably strong demand in January

A man shops for used vehicles at the Toyota of Deerfield dealership in Deerfield Beach, Florida.

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DETROIT – Stronger-than-expected demand for used vehicles last month led to the largest increase in wholesale values since late 2021, according to new data Tuesday from Cox Automotive.

The automotive data firm’s Manheim Used Vehicle Value Index was down 12.8% in January from inflated levels a year earlier but was up 2.5% compared with December. It was the largest month-over-month rise since a 3.9% jump from October to November 2021.

The larger-than-expected increase in the index, which tracks prices of used vehicles sold at its U.S. wholesale auctions, was in part the result of unseasonably high demand, according to Cox.

Used vehicle prices have increasingly become a point of interest for investors and the Biden administration as a barometer for easing inflation. The administration early last year blamed much of the rising inflation rates in the country on the used vehicle market. 

The Manheim Used Vehicle Value Index posted a 15% decline last year as buyers held off purchasing a used vehicle due to record-high prices.

Cox reports the average listed price of a used vehicle was $27,143 in December, the most recent data available, down nearly 4% from a year earlier. Retail prices for consumers traditionally follow changes in wholesale prices.

The research firm last month said the used vehicle market had stabilized, resembling its pre-pandemic normal, with inventory holding steady and prices dipping from their record highs. It forecast wholesale prices on its Manheim Used Vehicle Value Index to end 2023 down 4.3% from December 2022.

Used vehicle prices have been elevated since the start of the coronavirus pandemic, as the global health crisis combined with supply chain issues caused production of new vehicles to sporadically idle. That led to a low supply of new vehicles and record-high prices amid resilient demand. The prices and scarcity of inventory led consumers to buy used vehicles, increasing those prices as well.

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