Wholesale used-vehicle prices rose in February, fueled by stronger demand and tightened supply, according to two major indicators. One of those, the Manheim Used Vehicle Value Index, recorded a third-straight month of increases.
Cox Automotive said Tuesday that 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 4.3 percent in February from January. That is the index's largest increase for any February since a 4.4 percent rise in 2009, said Cox, which adjusts its figures 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 1.9 percent in February from January after seven months of sequential declines.
Still, wholesale prices were down compared with a year earlier, when used-vehicle demand was stronger overall. The Manheim index was 7 percent lower last month compared with the same month in 2022, according to Cox. The company also reported nonadjusted figures for the Manheim index — up 3.7 percent in February from January and down 5.6 percent year over year.
In 2022, wholesale prices went through periods of consecutive declines.
The Manheim index rose month over month only in May and December. At the beginning of 2023, Cox Automotive predicted that the depreciation trends would continue in the first half of this year. But that has not turned out to be the case, Cox Automotive Chief Economist Jonathan Smoke said.
"We've instead seen increasing wholesale prices, and I believe it's principally a reflection of how tight supply is in the used-retail market," Smoke told Automotive News.
Average nonadjusted wholesale prices for 3-year-old vehicles, the largest model year cohort at Manheim's auctions, rose 2.4 percent in February from January, Cox reported.
Positive sales momentum, which was seen in January, leads dealerships to have to restock used vehicles, Smoke said. And when they're restocking, they are more aggressive in the wholesale market.
"The wholesale market is super tight, and that's why we saw stronger sales conversion that drove prices higher," he added.
Cox Automotive estimated that the retail used-vehicle supply in the U.S. was at 41 days at the end of February, down from 48 days at the end of January and 54 days at the end of February 2022. Wholesale used-vehicle supply ended February at 24 days, down from 26 days at the end of January and 29 days at the end of February 2022.