Car dealers paid about 1% less for used cars at auction in the first half of July than they did in June.
That’s news, mainly because wholesale prices were already down more than 10% in June from where they stood a year ago.
The numbers come from the Manheim Used Vehicle Value Index, a product of Kelley Blue Book parent company Cox Automotive. The index tells us dealers are now paying 11.1% less for used cars than a year ago.
When wholesale prices fall, retail prices fall — usually about six to eight weeks later. Price drops have taken a little longer than normal to appear on used car lots this year, but they are showing up at last. The average used car price dropped by $109 in June.
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Kelley Blue Book analysts expect further price drops, but perhaps not an 11% retail drop to mirror an 11% wholesale drop.
America’s automakers built about 8.1 million fewer cars than normal during the height of the COVID-19 pandemic. Those cars will never reach the used market, keeping some upward pressure on used car prices for years to come.
Price drops will also come to each market segment to different degrees. Year over year, dealers paid about 6.5% less for pickup trucks in early July. But they paid 15% less for compact sedans. Sports cars were the sole outlier, fetching 2.6% more at auction in early July.
This story originally ran on KBB.com.
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