In April, used car prices experienced a decline for the first time since October, as indicated by Cox Automotive's Manheim Used Vehicle Value Index, which fell by 1.6% compared to March, although it was still up 1.8% year-over-year.
This decrease coincided with rising gas prices, which have surged due to ongoing conflicts in the Middle East, with the national average reaching $4.30 per gallon by the end of April, an increase of $1.12 from the previous year. As of Thursday, gas prices further escalated to $4.56 per gallon.
Jeremy Robb, chief economist at Cox Automotive, noted that these higher energy costs are significantly impacting consumer spending, leaving little disposable income for other purchases. The report highlights a shift in consumer behavior, with increased demand for older and all-electric vehicles as buyers seek more affordable options.
The average price of a used vehicle was reported at $25,390 in March, reflecting a slight increase from February. Despite the overall decline in used car prices, the electric vehicle market remains robust, with prices for used EVs still exceeding the overall market by over $9,200. The electric vehicle index from Manheim showed a year-over-year increase of 7.2% and a 1.4% rise from March.
This trend follows a strong start to the spring selling season, driven by consumers utilizing tax refunds to finance used vehicle purchases. Cox forecasts that retail prices for used vehicles will rise at a stable rate of about 2% this year, indicating a potential recovery in the market despite the recent price drop