While the demand for vehicles, both new and used, remains steady, the price of used vehicles slid again during the first two weeks of June.
According to Cox Automotive, which controls Mannheim Auction for used vehicles, wholesale used-vehicle prices, on a mix-, mileage- and seasonally adjusted basis, decreased 3.2% from May in the first 15 days of June.
During the last two weeks, Manheim Market Report prices declined an aggregate of 1.8%. Prices in the first two weeks of June typically decline much less.
Used car prices continues to fall
The midmonth Manheim Used Vehicle Value Index dropped to 217.3, which was down 9.4% from a year ago in the full month of June 2022. A seasonal adjustment contributed to some of the decline. The non-adjusted price change in the first half of June declined 2.6% compared to May, while the unadjusted price was down 9.1% year over year.
However, the decline continues the trend that started in March, as all major market segments saw seasonally adjusted prices that were lower year over year in the first half of June, Cox reported.
Only used markets for pickup trucks and vans, at 6.2% and 7.8%, respectively, lost less compared to the overall industry in seasonally adjusted year-over-year changes.
Cox analysts said the remaining segments lost between 9.6% and 12.5%, with sports cars again losing the most. All major segments also saw price decreases compared to May, with losses ranging from 1.9% to 4.7%. Sports cars were the sole outlier versus the other segments, with a 0.6% gain from May.
The supply of used vehicles in the market remains steady.
“Leveraging Manheim sales and inventory data, we estimate that wholesale supply ended May at 24 days, down one day from the end of April and down one day year over year. As of June 15, wholesale supply was unchanged from the end of May at 24 days but down one day year over year and down four days compared to 2019. Used retail supply measured in days’ supply and compared to 2019 suggests supply is about normal for this time of year, but wholesale supply remains tighter than normal,” the report noted.
Market given a boost as economic uncertainty ease
However, with the risk and uncertainty for the economy resolved with the increase in the debt ceiling in early June, measures of consumer sentiment are improving in June as the U.S. economy continues to add, Cox analysts noted.
Last week, top financial executives from General Motors and Ford Motor Co. told the Deutsche Bank Automotive conference the overall market for new vehicles remains steady.
The initial June reading on Consumer Sentiment from the University of Michigan increased 7.9% to 63.9 as views of both current conditions and future expectations increased.
The median expected inflation rate over the next year also declined to 3.3% from 4.2% last month, and the longer-term view declined to 3%. Consumers’ views of buying conditions for vehicles improved to the best level since February and were much better than a year ago.
Consumers saw improvement in prices and interest rates but still viewed both negatively. The daily index of consumer sentiment from Morning Consult has increased 1.9% so far in June. The view of the future was the highest since December 2021.
“The level of demand for vehicles is closely linked to consumer sentiment. The latest index of consumer sentiment from Morning Consult increased and is now up by 17% compared to the same time last year. This suggests that there should be an improvement in demand,” said Jonathan Smoke, Cox chief economist.