Cox Automotive has revised its forecast for the Manheim Used Vehicle Value Index, predicting a modest increase of only 0.2% for the year, down from an earlier estimate of 2%. This adjustment follows a 0.6% decline in September, marking a significant shift as it was the first month since early last year that the index did not show a year-over-year increase.
Historically, the Manheim index averages a 2.3% annual gain, but last year it only rose by 0.4% after a surge in prices during the pandemic. The decline in wholesale used-vehicle prices, which fell 1.2% year-over-year in September, is attributed to several factors including high diesel prices, rising interest rates, and ongoing geopolitical tensions.
Jeremy Robb, Cox Automotive's chief economist, noted that while the first half of the year saw unusual appreciation in vehicle prices, the current economic pressures are now affecting wholesale values. The market is also experiencing a shift in demand, with electric vehicles and smaller, fuel-efficient cars gaining popularity, contrasting with the declining values of larger trucks and SUVs.
As of August, the average price of a used vehicle was $27,239, significantly lower than the average new vehicle price exceeding $50,000, indicating that many consumers still prefer used vehicles for affordability. This trend suggests that dealers may be reaching their pricing limits, which could further influence market dynamics in the coming months