Auto research firm, Cox Automotive, the owner of the widely followed Manheim price index, released new data for October this week, revealing a continuing decline in wholesale used-vehicle prices. The latest numbers show that prices have reached their lowest levels since April 2021.
In October, the Manheim Used Vehicle Value Index stood at 209.4, marking a 2.3% decrease from September and a 4% decline from a year ago. These wholesale price fluctuations eventually impact the retail side of the market with a short time lag.
Chris Frey, senior manager of Economic and Industry Insights for Cox Automotive, commented, “October revealed some not-so-spooky price moves, namely a reversal of the gains that were seen during the prior two months.” Frey highlighted that the market remains balanced, and it’s not unexpected for wholesale vehicle values to experience some modest ups and downs. Hence, a slight increase in prices is still possible during the holiday season.
Additionally, Charles Schwab Chief Investment Strategist, Liz Ann Sonders, noted that the Manheim price index has “extended its maximum drawdown to -18%, which is the largest in the index’s history.”
A user on social media platform X pointed out, “The strikes [UAW] are over, now back to reality.” The recent surge in borrowing rates for used cars, from around 3.85% in Feb. 2022 to 7.3% this month according to Bankrate, has caused a decline in demand. The upswing in rates, combined with used car prices above pre-Covid highs, has sparked an affordability crisis among consumers.
According to Zerohedge.com, the largest drawdown in the history of wholesale used car prices implies that an increasing number of Americans who panic-bought cars during the Covid peak will find themselves underwater in auto loans.
By Zerohedge.com
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