Prices for used vehicles declined in September, offsetting the consistent increases that mirrored new vehicle prices during the same timeframe.
The trend of rising used vehicle prices has been a both a curse and a blessing for consumers for months now and a major factor in the rise in the consumer price index, or CPI, the closely watched gauge of inflation. The September fall was shown by Cox Automotive’s Manheim Used Vehicle Value Index.
The prices were a double-edged sword. Many potential buyers were hoping to find some level of relief from the ever-increasing new car prices during the past 18 months by turning to the used market, but found some used models had prices higher than their new siblings.
However, those looking to sell or trade in a vehicle on something new reaped the benefits of the price hikes, which at the very least offset the jump on new cars, trucks and SUVs.
Index reflects decline
According to the Manheim Index, wholesale used-vehicle prices — on a mix, mileage, and seasonally adjusted basis — fell 3% in September from August. In addition, the Manheim Used Vehicle Value Index declined to 204.5 and is now down 0.1% from a year ago. The non-adjusted price change in September was a decline of 2.1% compared to August, moving the unadjusted average price down 2.3% year over year.
During the month of September, daily MMR Retention, which is the average difference in price relative to current MMR (Manheim Market Report), averaged 98.4%, meaning market prices were below MMR values. The average daily sales conversion rate decreased slightly to 49.2%, which was below normal for the time of year, Cox Automotive economists reported.
Only three of eight major market segments saw seasonally adjusted prices climb higher year over year in September.
In a sign a significant number of consumers were looking for more affordable and more efficient vehicles, compact cars saw the largest increase, at 5.9%, followed by vans and pickups, both of which increased by 0.8%, according to the figures compiled by Cox for the Manheim Index.
The remaining five segments’ prices were well below the industry, with midsize cars minimally lower. Compared to August, all eight major segments’ performances were down. Full-size cars lost more than 14 percent. Pickups and compact cars declined the least, at 1.4% and 2.6%, respectively. The remaining five segments, including vans, SUVs, midsize, luxury and sports cars, lost between 3.1% and 5.2 percent.
Demand for used cars wavers in September
Overall, demand for used vehicles appeared to weaken during September, Cox reported.
Leveraging a same-store set of dealerships selected to represent the country from Dealertrack — another separate Cox service — used retail sales declined 8% in September from August and used retail sales were down 10% year over year.
Compared to September 2019, sales were down 18%, a slight improvement from August, when sales were down 19%, based on the same-store results.
Wards Auto estimated the Seasonally Adjusted Annual Rate or SAAR for light vehicle sales in September reached 13.49 million, which is up 2.3% from the August sales rate, and up 9.8% from September 2021.
New vehicles turn corner
Toyota, Hyundai, Kia and Volvo all reported strong sales for September, while General Motors posted robust results for the full third quarter, increasing 24% and surging past Toyota, the industry sales leader in 2021. BMW, Volkswagen and Porsche reported increases in sales for the third quarter.
However, supply chain problems and signs of resistance to higher prices continue to haunt the industry.
A long string of companies, including Ford, Honda, Stellantis, Nissan, Subaru and Mazda all reported sales dropped in September or during the third quarter.
With vehicle prices rising, Edmunds reports 14.3% of consumers who financed a new vehicle purchase in the third quarter of 2022 will pay $1,000 or more per month — the highest level Edmunds has on record — compared to 12.2% in the second quarter and 8.3% a year ago.