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Photo: Jim Watson, AFP via Getty Images

The used car supply shortage is loosening up.

Why it matters: Used car prices exploded in the past year, boosting inflation substantially, as disruptions in the production of new cars held back the supply of preowned cars.

By the numbers: As of mid-July, there were 44 days of supply in the used car market, according to Manheim. This means that at the current rate of used car sales, it would take 44 days to clear the inventory.

  • This is up from 36 days a month ago and a low of 30 days in mid-April.
  • "44 days’ supply is the normal pre-pandemic used-vehicle inventory level," Cox Automotive chief economist Jonathan Smoke tells Axios.

What they’re saying: "Simultaneously, the used market is approaching an equilibrium shift in demand and supply," Smoke says.

  • Manheim tells Axios that this shift is being driven by both a modest decline in used car sales volume and an improvement in used car supply.
  • Even though new car sales cooled off last month, they’re still strong. And buyers continue to take advantage of trade-in offers, which have brought many more used cars to market.
  • "At the same time, automakers are requiring lessees to turn in their leases after pandemic-related delays, which also increases the number of used vehicles in the market," Smoke says.
  • Indeed, Manheim also reported that wholesale used vehicle prices declined 1.7% during the first half of July from June.

What to watch: Despite the favorable trends in supply and the very recent decline in wholesale prices, retail prices are still high.

  • But as Axios' Felix Salmon recently reported, retail used car prices lag wholesale prices by about a month.

Go deeper

Consumers complain about high prices, but buy anyway

Data: University of Michigan; Chart: Axios Visuals

Shoppers are outraged by how expensive some stuff is getting.

Why it matters: Consumer sentiment is important because it’s generally correlated with spending. Complaints about prices today and concerns about inflation down the road have caused the recovery in sentiment to stall.

Jul 19, 2021 - Podcasts

Simultaneous disasters in Europe

The flood waters in Germany and Belgium have started receding with more than 180 people dead. It’s the worst flooding the region has seen in decades and comes on top of a worsening COVID outbreak throughout Europe.

  • Plus, why car prices are driving inflation.
  • And, retailers turn to facial recognition technology.

Guests: Axios' Dave Lawler, Kim Hart and Felix Salmon.

Credits: Axios Today is produced in partnership with Pushkin Industries. The team includes Niala Boodhoo, Sara Kehaulani Goo, Dan Bobkoff, Alexandra Botti, Nuria Marquez Martinez, Sabeena Singhani, Amy Pedulla, Naomi Shavin, and Alex Sugiura. Music is composed by Evan Viola. You can reach us at podcasts@axios.com. You can text questions, comments and story ideas to Niala as a text or voice memo to 202-918-4893.

Go deeper:

Don't expect stocked clearance sections as the economy reopens

Data: Census Bureau; Chart: Axios Visuals

Shoppers who are upset about the rising prices of goods won't find much solace in discount bins and sale racks.

Driving the news: Shortages have plagued almost every industry, with surging demand outpacing supply as the economy reopens.