Wholesale used-vehicle price depreciation has made a comeback, and prices are on track to keep softening this year.
"We think 2023 will be interesting," said Jonathan Banks, vice president of used-vehicle valuations at J.D. Power.
Banks presented his used-vehicle outlook for the year Thursday at the J.D. Power Auto Summit in Dallas.
"Obviously, a lot of different nuances will impact prices," he said. "Ultimately, we think it's going to be another great year — just a challenging year."
Wholesale prices are coming down from record highs logged in 2021 and early 2022. They aren't plummeting so much as they are getting closer to "where they should be," Banks said. Average wholesale prices — which ended 2021 at about $26,600 and 2022 at about $24,700 — will decline another 11 percent by the end of the year, Banks estimated.
He does not believe accelerated depreciation is indicative prices are going to fall off a cliff.
"There's no way, from our estimates, that we're looking at a used market that's going to be not profitable and not a great area to be," Banks said.
Wholesale declines still contrast used-vehicle retail prices. Though those remain elevated, retail gross margins were down to $1,409 at the end of 2022 — nearly to pre-COVID levels, Banks said.