Dealers Want to Put the Brake on Used-Car Prices

The Manheim Used Vehicle Value Index shows a slight decline to 202.8 in October 2024, down 3.2% vs. October 2023 and down just 0.1% vs. September 2024, as dealers continue to complain used vehicles are still too expensive.

The October Manheim Index is in keeping with a long trend of declines – that month’s drop makes it 26 months in a row the Manheim Index falls below the same month a year earlier. Analysts say declining used values reflect a gradual increase in new- and used-vehicle supply, as well as an increase in new-vehicle incentives.

However, dealers with major, publicly traded chains complain that used-vehicle values are still too high. In response, dealers are trying to source fewer cars from auctions and more from trade-ins, dealer trades and purchases off the street.

Michael Manley, CEO of AutoNation Inc., Fort Lauderdale, FL, says the chain is experiencing a “notable shift” in demand for used vehicles priced under $20,000 as buyers pursue affordability.

Manheim reports that used-value declines are decreasing as auction values stabilize. In March 2024, for instance, the Manheim Index was down a much broader 14.7% vs. March 2023.

Jeremy Robb, senior director of economic and industry insights at Cox Automotive, reports that seasonally adjusted wholesale prices in October are usually the weakest of the year. He adds that weather-related disruptions from Hurricane Helene and Hurricane Milton may have hurt business in October.

But in the longer term, and during earlier presentations, Cox Automotive has been pointing out reasons why the decline in used-vehicle wholesale auction values is losing steam and that used values could show more strength than expected.

For example, the used-vehicle supply for sale at new- and used-car dealerships — as opposed to private sales — is still at lower levels than usual. In addition, vehicles coming off-lease are also in decline, reflecting a drop in lease originations three years ago. Fewer off-lease vehicles mean fewer late-model used vehicles are hitting the market.

In an earnings conference call, Dan Clara, senior vice president, operations, for Asbury Automotive Group, says Asbury has decided that with short used-vehicle supplies, Asbury plans to emphasize used-car margins per vehicle over volume.

“Until the pool of used vehicles gets back to more historical levels, we will prioritize unit profitability over chasing volume,” Clara says. Asbury Automotive is based in Duluth, GA.

Manheim is a Cox Automotive company. The Manheim Index is a single measure designed to track used-vehicle wholesale price changes, weighted for a changing mix of product segments and mileage, and seasonally adjusted. The index is calculated relative to a starting point, where January 1997 equals 100.