The retail used market continues a strong start to 2023.
According to mid-month Manheim Used Vehicle Value Index released Monday, used retail sales are up 13 percent from February 2022.
Jeremy Robb, senior director of economic and industry insights at Cox Automotive, points out lower retail prices, shown in the VAuto data, are fueling the increase in sales.
Retail used prices dropped by $1,500 at the start of 2023. The January average retail price was at $27,000.
“This stirred increased demand from the retail buyer base, as some consumers had put off buying due to higher interest rates and increased economic uncertainty,” Robb said.
The increase in sales has depleted some inventory. Listings are down 13 percent from a year ago. Supply is at 44 days, lower than any point in 2022.
“If consumer demand continues, it’s going to add more pressure for dealers to restock,” Robb said. “Right as we go into the spring selling season.”
The current retail sales increase is attributed to the decrease in the wholesale prices last year.
“The principal reason for improving used retail sales early in 2023 is the price decline that was a product of last fall’s wholesale price drops,” said Jonathan Smoke, Cox Auotmotive Chief Economist.
Inventory in the wholesale market is currently down 10 percent from last year. Days of supply is at 24 days.
“Wholesale used vehicle prices increased a surprising 4.1 percent from January in the first 15 days of February,” Robb said. “This was the biggest February increase since 2009’s full month 4.4 percent gain.”
Robb cautioned the market will remain unpredictable in 2023 due to the economic uncertainty.
