Big Wheels: Used-vehicle values dip 7% in December

Used-vehicle values fell on a year-over-year basis in 2023 after the year began with an uptick in values before recording a decline through summer and fall as inflation cooled and elevated interest rates pressured consumers. Used-vehicle values declined 7% YoY and 0.5% month over month in December to 204 as dealership demand for used vehicles at auction fell below typical levels, according to Cox Automotive . Values were down nearly 21% compared with the end of 2021. [caption id="attachment_58336451" align="alignnone" width="850"] Courtesy of Cox Automotive [/caption] “While we typically start to see some leveling out in weekly trends during December, the declines continued to be stronger than normal,” Jeremy Robb , senior director of economic and industry insights at Cox, said on the company’s Industry Insights 2024 webcast today. Used-vehicle value trends began to normalize in 2023 but the year was still marked by volatility, he said. Values increased faster than expected at the beginning of 2023, then fell faster than normal in the summer and fall, Robb said. Values continued to fall faster than usual at yearend, he said. Dealers will typically begin to purchase stock at the end of the year to load up for the spring buying season, but dealers were not as active at auction to finish 2023 compared with past years, he said. All segments down YoY Used-vehicle values decreased on a YoY basis in December across each major market segment — compact cars, luxury, midsize cars, pickups, SUV/CUV and vans, according to Cox. Compact cars and midsize cars declined the most at 11.7% YoY and 8.1% YoY, respectively. SUVs and CUVs declined the least at 6.1% YoY, according to Cox. [caption id="attachment_58336454" align="alignnone" width="867"] Courtesy of Cox Automotive [/caption] “Prices have come down over the last two years, [but] we're still about 33% higher than the end of 2019,” Robb said. “Normal declines will likely be seen [in 2024], but the average value of a wholesale unit will continue to be higher than in the past.” The Manheim index has an inherent upward bias as new vehicles enter the market with higher prices and more expensive SUVs become increasingly popular among consumers, he said. The index has an average increase of about 2% each year over its history given those circumstances, Robb said. Cox Automotive expects used-vehicle values to experience a “spring bounce” between February and April as consumers receive tax refunds and the demand for used vehicles increases, Jonathan Smoke , senior vice president and chief economic adviser at Cox, said on the webcast. Meanwhile, consumer confidence rose 1.6% YoY in December, according to the Conference Board , a nonpartisan think tank. The number of consumers who plan to purchase a car in the next six months increased MoM and YoY. By another measure, consumer sentiment improved, according to the sentiment index from the University of Michigan , which increased 13.7% MoM and 16.6% YoY. Early-bird registration is now available for the second annual Auto Finance Summit East , which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross-section of industry players. Early-bird pricing ends March 15. Visit AutoFinance.Live to learn more.

Big Wheels: Used-vehicle values dip 7% in December

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