Wholesale used-vehicle prices rose through Q1, but may be at a turning point

Wholesale used-vehicle prices rose again in March, according to two major indicators.

One of those, the Manheim Used Vehicle Value Index, recorded a fourth-straight month of increases because of continued tight used-vehicle supply.

Cox Automotive said Friday its Manheim index — a measurement of wholesale used-vehicle prices calculated by tracking vehicles sold at Manheim's U.S. auctions and applying statistical analysis to those figures — rose 1.5 percent in March from February. Cox adjusts that figure for mix, mileage and seasonality.

Black Book's Used Vehicle Retention Index — another indicator of wholesale prices, weighted based on registration volume and adjusted for seasonality, vehicle age, mileage and condition — rose 2.9 percent in March from February.

Still, wholesale prices were down compared with a year earlier. The Manheim index was 2.4 percent lower last month compared with the same month in 2022, according to Cox. The company also reported non-adjusted figures for the Manheim index — up 3.5 percent in March from February and down 2.9 percent year over year.

"The used market has been very tight to start the year, and that created the environment for wholesale price increases that occurred in the first quarter," Cox Automotive Chief Economist Jonathan Smoke said during a quarterly insights call Friday.

However, Cox's Manheim index reading in the first half of March was more positive than the final value. It represented a "turning point" after 11 straight weeks of price increases, Smoke said in a news release.

"Based on full-month data and other key metrics, we definitely think conditions are weakening," Smoke said in the release. "March came in like a lion and went out like a lamb regarding wholesale vehicle values."

Average non-adjusted wholesale prices for 3-year-old vehicles, the largest model year cohort at Manheim's auctions, rose 1.6 percent over the last four weeks, Cox reported.

Cox Automotive estimated the retail used-vehicle supply in the U.S. was near 38 days at the end of March, down from 43 days at the end of February and 47 days at the end of March 2022. Wholesale used-vehicle supply is estimated to have ended March at 22 days, down from 24 days at the end of February and 23 days at the end of March 2022.

Retail sales of used vehicles rose 13 percent in March from February but failed to see a typical March lift, according to initial estimates from Cox Automotive. It estimated them to be down 6 percent year over year. It compiled those estimates by assessing retail vehicle sales based on observed changes in advertised units tracked by vAuto.

Smoke indicated the slower growth in wholesale prices seen as March ended will continue in April.

"Our forecast assumes some negative months this spring and summer, so it will be a bumpy ride," Smoke said in the news release. "The strong start to the year is a clear testament to what a very supply-constrained market is capable of seeing with just a modest improvement in demand."

Along with the slowing increases, some negative monthly moves are expected in the Manheim index, Chris Frey, senior manager of economic and industry insights at Cox Automotive, said during the quarterly call.

End-of-year expectations for the Manheim index were upwardly revised based on the wholesale price increases seen through the first quarter. Cox Automotive now forecasts the index will be up 1.6 percent year over year in December.

In 2022, wholesale prices went through periods of consecutive declines. The Manheim index rose month over month only in May and December.

The Black Book index rose to 175.7 in March, up 4.8 points from February, Black Book said Thursday. That figure is 6.4 percent below where it was at the same time in 2022. And it's 53 percent higher than in March 2020, when the coronavirus pandemic began.