Wholesale Used-Vehicle Prices Decrease in December, End Year Down 7.0%

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) decreased 0.5% in December from November. The Manheim Used Vehicle Value Index (MUVVI) dropped to 204.0, down 7.0% from a year ago. Compared to December 2021, used-vehicle values are down nearly 21%.

“December’s decline brought a volatile year to a close,” said Jeremy Robb, senior director of Economic and Industry Insights for Cox Automotive. “The spring bounce was much more pronounced than expected in 2023, and prices slid just as rapidly after that bounce, finishing more calmly in December as expected. The 7.0% year-over-year loss was larger than our original forecast, but it pales in comparison to the nearly 15% decline we had a year earlier. 2024 is looking to be less volatile than 2023, but we’ve been taught to expect the unexpected in the wholesale market.” 

The seasonal adjustment reduced the December decrease. The non-adjusted price in December declined by 2.0% compared to November, moving the unadjusted average price down 7.7% year over year.

In December, Manheim Market Report (MMR) values saw above-average weekly declines in the final two weeks of the year. Over the last four weeks, the Three-Year-Old Index fell an aggregate of 1.4%. Those same four weeks delivered an average decline of 0.5% between 2014 and 2019. Over the month of December, daily MMR Retention, which is the average difference in price relative to the current MMR, averaged 99.0%, meaning market prices were just below MMR values. The average daily sales conversion rate increased to 53.8%, which indicates that demand was improving and relatively strong for the time of year. For comparison, the daily sales conversion rate averaged 52.2% in December 2019.

The major market segments saw seasonally adjusted prices that remained lower year over year in December. Compared to December 2022, luxury, pickups, and SUVs lost less than the industry, down 6.9%, 6.5%, and 6.1%, respectively. Compact cars continued as the worst performer year over year, down 11.7%, followed by midsize cars, losing 8.1%; and vans, down 7.9%. Compared to last month, luxury lost 0.4%, SUVs were down 0.3%, and midsize cars declined just 0.1%. Pickups and vans declined by 0.8%, and compact cars lost 0.6%, all worse than the industry’s 0.5% loss.

Used Retail Vehicle Sales Increased in December

Assessing retail vehicle sales based on observed changes in units tracked by vAuto, we initially estimate that used-vehicle retail sales in December were up 3% compared to November, while the year-over-year comparison with 2022 improved. Used retail sales are estimated to be up 1% year over year in December. The average retail listing price for a used vehicle declined 0.4% over the last four weeks.

Using estimates of used retail days’ supply based on vAuto data, an initial assessment indicates December ended at 56 days’ supply, up two days from 54 days at the end of November and one day lower than how December 2022 ended at 57 days. Leveraging Manheim sales and inventory data, wholesale supply is estimated to have finished December at 31 days’ supply, up one day from the end of November and flat compared to December 2022’s estimate of 31 days.

December’s total new-light-vehicle sales were up 13.0% year over year, with one fewer selling day than December 2022. By volume, December new-vehicle sales were up 17.5% month over month. The December sales pace, or seasonally adjusted annual rate (SAAR), came in at 15.8 million, an increase of 16.8% from last year’s 13.5 million and up 3.2% from November’s unrevised 15.3 million pace.

Combined sales into large rental, commercial, and government fleets increased 22% year over year in December. Sales into rental fleets were up 72% year over year, sales into commercial fleets were down 14%, and sales into government fleets were up 5.7%. Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 12.9% from last year, leading to an estimated retail SAAR of 13.4 million, up 2.0 million from last year’s 11.4 million pace and up slightly from November’s 13.0 pace. Fleet market share was estimated to be 16.1%, unchanged from last year.

Rental Risk Prices and Mileage Dropped Significantly in December

The average price for rental risk units sold at auction in December declined 4.5% year over year. Rental risk prices also decreased by 3.3% compared to November. Average mileage for rental risk units in December (at 44,500 miles) was down 20.2% compared to a year ago and down 5.3% from November.

Measures of Consumer Confidence Saw Strong Improvement in December

The Conference Board Consumer Confidence Index® increased by 9.6% in December, as views of both the present situation and future expectations improved strongly. Consumer confidence was up 1.6% year over year. Plans to purchase a vehicle in the next six months increased and was up year over year. Consumer sentiment also improved in December, according to the sentiment index from the University of Michigan. The Michigan index increased 13.7% for the month and was up 16.6% year over year. Consumer expectations for inflation declined, with median expectations for inflation over the next year at the lowest level since March 2021. Buying conditions for vehicles increased and was up year over year. The daily index of consumer sentiment from Morning Consult improved 5.6% in December to end up 10.8% year over year. Gas prices declined further in December. According to AAA, the national average price for unleaded gas fell 4.2% to $3.11 per gallon as of Dec. 31, which was down 3% year over year and near the lowest average price in June 2021.

In place of a live Manheim Used Vehicle Value Index call, the Industry Insights team is providing the deep dive content normally covered in the quarterly calls.

The complete suite of monthly MUVVI data for January will be released on Feb. 7, 2024, the fifth business day of the month, as regularly scheduled. The next quarterly MUVVI call will be held on April 5, 2024, at 11 a.m. EDT.

For questions or to request data, please email manheim.data@coxautoinc.com. If you want updates about the Manheim Used Vehicle Value Index, as well as direct invitations to the quarterly call sent to you, please sign up for our Cox Automotive newsletter and select Manheim Used Vehicle Value Index quarterly calls.

Note: The Manheim Used Vehicle Value Index was adjusted to improve accuracy and consistency across the data set as of the January 2023 data release. The starting point for the MUVVI was adjusted from January 1995 to January 1997. The index was then recalculated with January 1997 = 100, whereas prior reports had 1995 as the baseline of 100. All monthly and yearly percent changes since January 2015 are identical. Learn more about the decision to rebase the index.