Used vehicles are on display at the Roger Beasley South dealership on June 7, 2023 in Austin, Texas.
Brandon Bell | Getty Images
DETROIT — Wholesale prices for used vehicles posted their biggest drop since the start of the coronavirus pandemic last month as prices are expected to stabilize in the second half of this year.
Cox Automotive reported Monday a 4.2% decline from May to June in the Manheim Used Vehicle Value Index to 215.1. According to Cox, it is the third consecutive monthly decline and one of the largest monthly declines in the index ever.
“Auction buyers appear to have taken an early summer holiday and while used retail inventory has improved in recent weeks, we expect less volatility in wholesale price movements towards the end of the year,” said Chris Frey, senior manager of Economics at Cox . and industry insights, said in a release.
The index, which tracks vehicles sold at U.S. wholesale dealer auctions, remains higher than historical levels, but is down 10.3% from June 2022.
The drop could help push used car prices down for consumers in the coming months, as retail prices traditionally follow changes in wholesale prices.
Used vehicle prices have been high since the early days of the coronavirus pandemic, as the global health crisis combined with supply chain issues led to a sporadically halt in new vehicle production. This led to a low supply of new vehicles and record high prices amid resilient demand. The cost and scarcity of inventory drove consumers into the used vehicle market, driving those prices up as well.
Cox Automotive expects wholesale prices for used vehicles to fall about 1.1% by the end of this year compared to December 2022. That is lower than the company’s initial forecast of a 4.3% decline as the pricing and demand were more resilient than expected at the start of the year .