Current Used Vehicle Market
Average wholesale used vehicle prices fell modestly to below $15,000 in June after reaching that threshold for the first time in May, and this moderation continued into July. Lower conversion rates (vehicles sold as a percentage of vehicles offered) are a further indication that dealers may be pushing back on high wholesale used vehicle prices. High used vehicle prices have made national news lately, as the consumer price index rose by a nearly 13-year high of 5.4% annually in large part due to a 45.2% annual jump in the used vehicle CPI. Dealer push-back may therefore reflect consumer reluctance to buy used vehicles with prices so inflated, in turn causing dealers to avoid being stuck with high-priced inventory.
Softer consumer demand for used vehicles may also be indicated by moderating retail used vehicle sales and declining CPO sales in June. According to KAR Global Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale prices in June averaged $14,652 – down 2.3% compared to May, up 12.4% relative to June 2020, and up 27.6% compared to pre-COVID/June 2019. All segments except compact cars showed month-over-month declines in average prices.
When holding constant for sale type, model-year-age, mileage, and model class segment — using criteria that characterize off-lease units — prices in June were up by over 40% versus June 2020 and June 2019 for both midsize cars and midsize SUV/CUVs. Based on NADA data, retail used vehicle sales by franchised and independent dealers in June were up 0.7% month-over-month and 2.5% year-over-year. Year-to-date through June, sales are up 21.1% versus 2020 and 3.1% compared to 2019/pre-pandemic levels.
CPO sales were down 10.9% from the prior month and down 8.8% versus last year, according to figures from Autodata. On a year-to-date basis through June, CPO sales remain up 18.0% compared to last year and 4.3% versus 2019 (Tom Kontos, Chief Economist, KAR Global).