Lower used retail prices are bringing in consumers, according to the new Manheim Market Insights from Cox Automotive.
Manheim reported a 4 percent decrease in prices at dealerships, bringing down inventory and days of supply in August. Inventory is down 9 percent from last year. The days of supply, 43.9 days, is down five days from the end of July.
“Affordability has been one of the biggest headwinds for the used marketplace over the last year, so any sign of relief is likely helping some pent-up demand,” said Jeremy Robb, senior director of economic and industry insights at Cox Automotive.
Robb cautions the lower retail prices could be temporary, due to the constrained inventory.
“It’s good to see used sales increase and consumers more willing to purchase, but it could mean some changes are coming. Used retail prices generally lag trends in the wholesale marketplace, so those declines in May and June are showing up,” Robb said. “Low inventory could cause upcoming volatility.”
After months of declining wholesale prices, Manheim reported a flattening of prices. The Manheim Used Vehicle Value Index had a slight increase of 0.1 percent in the first 15 days of August. The sales conversion rate at auction rose in the past month.
“This is the first time since March that we are seeing an uptick in the index, so we’re breaking a downward streak that we’ve seen the last five months,” Robb said.
“Right now we are seeing wholesale values flatten with retail price declines stirring and demand but the low inventory levels could cause prices to change soon.