General

Good news: wholesale prices for used cars are falling again

A used car lot
A lot of used carUsed car prices seem to be resetting. Wholesale used car prices fell in the first 15 days of October – a good sign that used car prices continue to decline they have been there since the summer.

According to the Manheim Used Vehicle Value Index, car dealers paid nearly 2% less for used cars at auction in the first two weeks of the month. Wholesale prices are now 9% lower than a year ago.

Manheim is part of Cox Automotive, which is also the parent company of Kelley Blue Book.

A drop in the wholesale price turns into a drop in the retail price. When dealers pay less for cars at auction, they can sell them for less and keep the lights on.

Every segment of the used car market saw prices fall. Compact cars had the lowest decline at -5.4%. SUVs, midsize cars and luxury cars saw their wholesale prices drop more than 10% year-over-year.

Car dealers measure their stock of cars to sell in a metric they call days of stock — how long it would take to sell cars at the current sales rate if they stopped buying. Nationwide, used car dealers had about 49 days worth of used cars to sell in early October, nine days more than a year ago.

Supply used measured in days of supply and compared to 2019 suggests supply is tighter than normal for this time of year, indicating that depreciation should also be lower than normal for the time of year.