U.S. wholesale used vehicle prices decreased 1.3% month over month in June, following four consecutive months of record highs, according to Cox Automotive.
This brought the company’s Manheim Used Vehicle Value Index to 200.4—up 34.3% from a year ago and a 1.3% decrease from a high of 203 in May.
“After several months of record highs, all indicators now show that wholesale used vehicle prices peaked in early June and have started to decline,” said Cox Automotive Chief Economist Jonathan Smoke. “In June, the Index hit a record high of 203, and we don’t anticipate seeing numbers in the 200s again for likely several years.”
Based on company data, Smoke said supply and demand are more in balance and may be leaning slightly in favour of buyers. “There are still supply constraints and will be for some time, but we anticipate that substantially inflated used vehicle values will erode by 9% between now and the end of 2021,” he said.
The company’s Manheim Market Report (MMR) prices saw weekly increases in the first two full weeks of June, but the other weeks revealed accelerated price declines. (MMR is a valuation tool). Cox Automotive said retail prices are still rising, though at a slower pace now—and they are expected to peak later in July.
For the last five weeks, the index declined a net 0.7%, and throughout May, Cox Automotive’s MMR Retention (the average difference in price relative to current MMR) averaged 99%.
“The sales conversion rate, which peaked in April in the 80s, also slowed as the month progressed and ended the month at a level in the low 50s, much more typical for the month of June,” said the company.
The company’s estimates also indicate that total used-vehicle sales were down 11.1% YOY in June. The estimated used vehicle seasonally adjusted annual rate (SAAR) for June is 39.0 million—down from 43.6 million from the same period in 2020, and down compared to May’s 40.0 million SAAR.
The June used retail SAAR estimate is 21.3 million, which is down from 23.1 million in 2020, and also down MOM from May’s 21.9 million retail SAAR.
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