According to a recent Bloomberg report, the record-breaking rise in used car prices appears to have peaked, as wholesale prices have declined now for two straight months. How will this affect retail used car prices and the expected used vehicle supply in the months to come?
These are two big questions we will explore in this month’s Acquisition Council which streams live on our YouTube channel later this month. We will also be talking about using Facebook Marketplace to source secondhand vehicles from private sellers off the street.
The Acquisition Council
Aired Live in August 2021
Used Car Prices? Have They Peaked and What is Next?
As of mid-June, Manheim’s wholesale index of used vehicle value was 36 percent higher than a year earlier, down from an annual rate above 50 percent in April. And according to a Cox Automotive report released Aug. 6, wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) decreased 2.6% month-over-month in July. This brought the Manheim Used Vehicle Value Index to 195.2, a 23.6% increase from a year ago.
Soaring prices for pre-owned vehicles helped push U.S. inflation to the highest in more than a decade, with the cost of used cars and trucks climbing 10 percent in April, and another 7.3 percent in May. This helped make the auto industry responsible for one-third of the overall rise in consumer prices.
One effect of higher prices has been to push the average age of vehicles on U.S. roads up to a record 12.1 years in January.
Manheim Market Report (MMR) prices saw weekly declines every week in July with price declines accelerating through mid-month but then slowing the rate of decline over the last two weeks.
During the last five weeks, the Three-Year-Old Index declined a net 3.6%. Over the month of June, MMR Retention, which is the average difference in price relative to current MMR, averaged 98.4% and ended the month close to 100%. This means that valuation models continue to slightly overstate market prices, but the gap is narrowing. The sales conversion rate also improved as the month progressed and ended the month at a level much more typical for the month of July.
Guests & Panelists
To help put this into perspective, we welcome back retired automotive veteran Gary Wade who has joined us on past VAN University webinars but will be making his first appearance on the Acquisition Council. Gary will be one of three panelists in our discussion about wholesale and retail prices, which begins halfway through the show at the bottom of the hour.
Before the discussion, we have Acquisition Specialist Zac Dill from Tuscaloosa Ford in Alabama slated to join us for a brief interview. Zac is a advocate for sourcing private-party vehicles from consumers using Facebook Marketplace. He has a unique approach that works well for him, ad he joins us on the show to share some of his insights.
Following the interview, we have VAN Performance Manager Jennifer Poudrier slated for a conversation on vehicle acquisition best practices with co-host Ben.