Wholesale Used-Vehicle Prices See Large Decline in June

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) decreased 4.2% in June from May. The Manheim Used Vehicle Value Index (MUVVI) declined to 215.1, down 10.3% from a year ago.

“The 4.2% drop is among the largest declines in MUVVI history and the largest decline since the start of the pandemic in April 2020 when the index plunged 11.4%,” said Chris Frey, senior manager of Economic and Industry Insights for Cox Automotive. “The year-over-year decline was also large, another 2.7% drop from May’s annualized 7.6% decline, but as mentioned last month, auction prices were lower in the fall last year, and we expect these increasing year-over-year moves to shrink in the months ahead as the market normalizes. Buyers at auction look to have taken an early summer break, and while used retail inventory has been improving over the last several weeks, we are expecting less volatility in wholesale price movements through year-end.”

June’s decrease was a record for the month and was slightly impacted by the seasonal adjustment. The non-adjusted price change in June decreased by 3.8% compared to May, moving the unadjusted average price down 10.1% year over year.

In June, Manheim Market Report (MMR) values saw above-average declines that were relatively consistent. Over the last four weeks, the Three-Year-Old Index declined an aggregate 3.8%. Over the month of June, daily MMR Retention, which is the average difference in price relative to the current MMR, averaged 98.4%, meaning market prices were below MMR values. The average daily sales conversion rate declined to 52.2%, which was below normal for the time of year. For context, the daily sales conversion rate averaged 60.7% in June 2019. Conditions favored buyers all month, but supply remained limited.

The major market segments saw seasonally adjusted prices that remained lower year over year in June. Compared to June 2022, pickups and vans lost less than the industry, at 6.6% and 8.5%, respectively. While sports cars fared the worst at 14.8% year-over-year, compact cars lost 12.6%, and midsize cars were off by 12.2%. Compared to last month, all segments were down, with sports cars, luxury, vans, and SUVs off less than the industry. Compact and midsize cars lost the most, with declines of 6.6% and 6.7%, respectively.

Used Retail Vehicle Sales Declined in June

Assessing retail vehicle sales based on observed changes in advertised units tracked by vAuto, we initially estimate that used-vehicle retail sales in June were down 4.0% compared to May but saw the year-over-year comparison with 2022 improve. Used retail sales are estimated to be down 6.0% year over year in June, the best year-over-year performance since March. The average retail listing price for a used vehicle moved 0.5% lower over the last four weeks.

Using estimates of used retail days’ supply based on vAuto data, an initial assessment indicates June ended at 45 days’ supply, down four days from 49 days at the end of May but seven days lower than how June 2022 ended at 52 days. Leveraging Manheim sales and inventory data, wholesale supply is estimated to have finished June at 24 days, unchanged from the end of May and down two days from June 2022’s estimate of 26 days.

June’s total new-light-vehicle sales were up 19.9% year over year, with the same number of selling days as June 2022. By volume, June new-vehicle sales were up 0.5% month over month. The June sales pace, or seasonally adjusted annual rate (SAAR), came in at 15.7 million, an increase of 20.2% from last year’s 13.0 million and up 4.0% from May’s revised 15.1 million pace.

Combined sales into large rental, commercial, and government fleets increased 45% year over year again in June. Sales into rental fleets were up 85% year over year, sales into commercial fleets were up 15%, and sales into government fleets were up 41%. Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 16.9%, leading to an estimated retail SAAR of 12.4 million, up from last year’s 11.1 million pace but down from last month’s 12.7 million pace. The fleet market share was estimated to be 17.4%, a gain of 2.1% over last year’s share and up from May’s 16.3% market share.

Rental Risk Prices and Mileage Decline in June

The average price for rental risk units sold at auction in June was down 2.5% year over year. Rental risk prices were off by 4.5% compared to May. Average mileage for rental risk units in June (at 56,700 miles) was down 3.5% compared to a year ago and down 3.1% from May.

Measures of Consumer Confidence Improved in June

The Conference Board Consumer Confidence Index® increased by 7.0% in June, as views of both the present situation and future expectations improved. Consumer confidence was up 11.5% year over year. Plans to purchase a vehicle in the next six months declined but were little changed year over year. The confidence index did not fall as much during the pandemic as the sentiment index from the University of Michigan. Still, both series improved in June and were up substantially year over year against the peak of the inflation surge in 2022. The Michigan index increased 8.8% for the month and was up 28.8% year over year. Consumers’ views of buying conditions for vehicles increased in June from what had been the lowest level this year in May, and the June view was much better than a year ago. The daily index of consumer sentiment from Morning Consult also measured improving sentiment in June, as the index posted a strong 4.4% gain over May. Expectations of the future improved the most in June in the Morning Consult data and are at the highest level since August 2021. Gas prices declined slightly in June. According to AAA, the national average price for unleaded gas fell 1.0% in June to $3.54 per gallon, which was down 27% year over year.

The Q2 call is on July 10 at 11 a.m. EDT.

The complete suite of monthly MUVVI data for July will be released on Aug. 7, 2023, the fifth business day of the month, as regularly scheduled. The next quarterly call will be held on Friday, Oct. 6, 2023, 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.