Used car prices hit highest level since summer 2023

(NewsNation) — A key measure of used car prices just hit its highest level in nearly three years as strong demand and tight supply push wholesale values higher.

The Manheim Used Vehicle Value Index, which tracks the prices dealerships pay for used cars at auction, rose 6.2 percent in March from a year earlier to its highest point since the summer of 2023, according to Cox Automotive.

Wholesale prices have been moving higher since the start of the year, as dealers anticipated strong demand from this year’s larger tax refunds. Those refunds helped “activate pent-up demand” and lift used retail sales in the first quarter, Cox said.

“The end of March typically proves to be the ‘peak’ for price action at Manheim, but the way this tax-refund season is unfolding, it could continue for a bit longer,” Jeremy Robb, chief economist at Cox Automotive, said in an analysis.

He added: “The Middle East conflict could dampen the spirits of the U.S. consumer, but we just haven’t seen it yet — our data is showing resiliency in the economy.”

Used vehicle inventory at the retail level slipped below two million units at the end of March and is now the tightest on record in Cox’s data, Robb said.

For car shoppers, limited inventory is keeping used car prices firm, with popular three‑year‑old models priced roughly 2 percent higher than a year ago and above typical seasonal trends, Cox noted.

Affordability pressures in the new car market are also helping fuel demand, pushing more consumers toward used vehicles. New car sales are down 5 percent year to date, while used sales are up 1 percent.

The drop in new vehicle sales is constraining trade-in volumes and limiting supply into the used market. COVID-19 pandemic-era disruptions are another factor weighing on used car supply, since automakers built about 8 million fewer vehicles than normal in 2021 and 2022, according to Kelley Blue Book.

The average used vehicle listing price was $25,287 in February, up from $25,006 a year earlier but below the $27,603 seen in 2022, per Cox Automotive data.

Americans are financing nearly $30k for used cars

Americans are increasingly struggling to afford new cars, and that pressure is spilling over into the used market.

The average amount financed for used vehicles was $29,314 in the first quarter, according to Edmunds — up roughly $1,000 from a year earlier and well above $22,200 pre-pandemic.

Used car buyers also put less money down and took on longer loans in the first quarter compared with the same period last year.

The shift suggests many are extending loan terms to keep monthly payments manageable, which averaged $559 for used vehicles in the first quarter.

Part of the challenge is that affordable used cars are especially hard to find.

Used cars priced below $15,000 had just 31 days’ supply in February — 9 days below the overall industry average, according to Cox Automotive.

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