The retail price of the average used car rose slightly in September, but the trend may not last. The prices used car dealers pay at auction for the cars they later sell declined in October.
Car dealers obtain used cars through two pipelines – trade-ins and vehicles bought at used car auctions. They have control over what they offer you for your trade-in. At auctions, they’re at the mercy of the market.
We track auction prices through something called the Manheim Used Vehicle Value Index.
Kelley Blue Book parent company Cox Automotive also owns Manheim, the largest auto auction operator. Manheim’s index follows price trends at its auctions. The index fell by 1.9% in October – a larger adjustment than we usually see month-to-month.
Wholesale price drops tend to become retail price drops after six to eight weeks. So we expect a corresponding drop in retail prices in late December.
A second straight rate cut by the Federal Reserve, announced last week, could also help shoppers.
Consumer confidence is rebounding.
The Conference Board Consumer Confidence Index jumped 9.6% in October, when only a slight increase had been expected, and September’s index was revised higher. Consumers’ views of both the present and the future improved. Consumer confidence was up 9.7% year over year. Plans to purchase a vehicle in the next six months increased substantially to the highest level since December 2019.
