Wholesale used-vehicle prices slipped further in March, the second month in a row they've declined after a long period of record elevation.
Cox Automotive said Thursday that its Manheim Used Vehicle Value Index, which tracks vehicles sold at Manheim's U.S. auctions, fell 3.3 percent in March compared with February. The decline in February pric-es was the first the index had recorded since August.
Still, wholesale prices were nearly 25 percent higher in March than they were one year earlier. Those numbers are adjusted for mix, mileage and seasonality. On a nonadjusted basis, the Manheim Index rose 0.6 percent from its February level, with prices up 23 percent year over year, according to Manheim.
"As we move into the next several weeks, prices are likely to move up with the spring selling season, though the magnitude of the monthly increases are likely to be lower than we've experienced over 2021," said Chris Frey, Cox Automotive's senior manager of economic and industry insights, who spoke during the company's quarterly conference call Thursday.
Retail sales outlook
Used-vehicle retail sales climbed 37 percent from February to March. A potentially larger increase was hindered because tax refund issuance is moving at a slower pace, Cox Automotive said.
The company also estimated used-vehicle retail sales to be down 15 percent year over year. The company said it calculated those retail sales metrics by using a same-store set of dealerships selected from Dealertrack to represent the country.
About 45 percent of likely tax refunds this year have been issued, according to the company, which based that on IRS statistics through March 22. About 71 percent were disbursed by the same week in 2019, it said.
Stronger retail sales could manifest in April as more of the refunds are doled out.
"I think April is likely to be the best month of 2022 for used-vehicle sales," Cox Automotive Chief Economist Jonathan Smoke said. "Yes, there are growing headwinds that may reduce demand from what it hypothetically would have been without them. But as history has shown, when cash is flowing into consumer accounts, retail used sales will increase."
Cox estimated used-vehicle retail supply was at 44 days at the end of March. That's down from 53 days at the end of February, but up from 32 days in March 2021. Wholesale supply ended March at 23 days, down from 29 days in February but higher than 18 days in March 2021.
Average wholesale prices for 3-year-old vehicles rose 1.2 percent for the full month.
Black Book index
Black Book's Used Vehicle Retention Index also fell from February to March.
The index dropped to 187.7 points in March, down 5.3 points from its February level, Black Book said Wednesday. That's up 33 percent from March 2021 and up 64 percent from March 2020, when the COVID-19 pandemic began to impact the industry.
March wholesale prices declined again in all segments except 2- to 8-year-old full-size and compact vans, according to Alex Yurchenko, Black Book's chief data science officer.
Yurchenko said he would have expected a pre-pandemic March market to gain strength as dealers shopped for vehicles to offer during tax season. A few segments — compact cars and compact crossovers — showed increases in March because of tax season and higher gasoline prices.
"The spring tax season is usually strongest for cheaper vehicles, but with wholesale values reporting a record 28.7 percent increase in 2021, dealers are having to look at even older model years to purchase in the 'sweet spot' for their tax season shoppers," Yurchenko said in a news release.
Yurchenko said he expected to see a "moderate decline" in prices over the next several months.