The auto research company Cox Automotive – proprietor of the closely monitored Mannheim Price Index – recently released fresh data for October revealing that wholesale prices of used vehicles continued to drop, reaching their lowest point since April 2021.Thank you for reading this post, don't forget to subscribe!
In October, the Mannheim used vehicle price index registered at 209.4, marking a 2.3% decline from September and a 4% decrease from the previous year. These wholesale price fluctuations eventually affect the retail segment of the market with a slight delay.
According to Chris Frey, senior manager of economic and industry insights at Cox Automotive, “October saw some unexpected price shifts, reversing the gains observed over the past two months.” He also noted, “This confirmed the caution expressed during the UAW strike last month, averting a move that could have driven up wholesale prices. The decrease in prices this October mirrored the 2.2% decline from last October, which was not surprising, as the market remains stable. It is typical for wholesale vehicle values to experience some modest increases during the holiday season, and with two months remaining, we may witness some price upticks.”
Liz Ann Saunders, chief investment strategist at Charles Schwab, was the first to share the information on the social media platform, reporting that “Strikes” (referring to UAW) are over and it’s “back to reality now,” implying a decline in the demand for used cars.
As per Bankrate data, the average interest rate for pre-owned cars surged from approximately 3.85% in February 2022 to 7.3% this month. This sudden rate hike – given that used car prices still exceed pre-COVID levels – has resulted in an affordability crisis among consumers.
The most substantial plunge in wholesale prices for used cars in history implies that numerous Americans who hastily purchased cars during the height of COVID will now find themselves overwhelmed by auto debt.
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