Americans are paying less for used cars this year than a year ago, but that may not last forever. Used car prices have already begun to rise — up by just $164 on average last month. Now, signs hint that further increases are ahead.
The Manheim Used Vehicle Value Index tracks the prices car prices dealers pay to restock their lot at used car auctions. It’s published by Kelley Blue Book parent company Cox Automotive, which also owns auction giant Manheim.
Retail used car prices tend to do what auction prices do after about six to eight weeks. When auction prices fall, used car price declines are ahead. When they rise, car shoppers should expect to pay more soon.
The index rose 0.5% in the first 15 days of August.
The used car market’s fundamentals changed during the COVID-19 pandemic. Between 2020 and 2022, automakers built about 8 million fewer cars than they otherwise would have. Many Americans who routinely rolled one car lease into another every three years stopped that practice, buying their off-lease car at lower pre-pandemic prices.
The used car supply is recovering slowly from that one-two punch. The flow of off-lease cars is beginning to return. “The three-year-old segment is the largest at Manheim, and wholesale values for those units have increased for five weeks in a row. Recently, we have seen the strength broaden out, as values for some of the older segments have also seen small gains week over week,” says Jeremy Robb, senior director of Economic and Insights at Cox Automotive.
That may keep prices from returning to last year’s highs. But the average used car will likely cost more this fall than it does right now.
