Jan 13, 2023 - Economy

Used car prices are still declining from COVID-era highs

Data: Cox Automotive; Chart: Axios Visuals
Data: Cox Automotive; Chart: Axios Visuals

Used vehicle prices — once at the bleeding edge of the post-COVID inflationary upswing — are falling fast. And the pace of the downturn is building, according to a leading indicator.

Why it matters: While auto price movements are typically a small factor in overall inflation, outsized moves can exert a big influence on inflation data.

Driving the news: One component of Thursday's Consumer Price Index release was a nearly 9% drop in prices of used cars and trucks over the prior year.

Flashback: Used vehicles were in the vanguard of the post-pandemic price surge, which centered on goods that were in high demand but low supply due to COVID-related halts to production.

  • In June 2021, used auto prices were up a remarkable 45% from the previous year.

What we're watching: The Manheim Used Vehicle Value Index tracks wholesale prices of used cars sold at auction. It tends to predict prices shoppers see on auto lots a couple of months later.

  • The latest numbers from the firm (part of Cox Enterprises, which also owns Axios) showed a 13% drop in auction prices in December from the prior year — suggesting the consumer price slump will snowball in the coming months.

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