The wholesale prices car dealers pay for the used cars they later sell fell by 2.1% in the first 15 days of May.
According to the Manheim Used Vehicle Value Index, wholesale auction prices are now about 7% lower than they were one year ago after adjusting for normal seasonal variations. The index is a product of Kelley Blue Book parent company Cox Automotive.
Used car prices rose in April, with the average buyer paying $26,799.
They may begin to fall soon. Trends in wholesale pricing become trends in retail pricing about six to eight weeks later.
Wholesale prices declined significantly in April – the index dropped 3% that month – and have continued so far this month.
But, in the long run, prices are likely to remain high for several years. Pandemic-related factory shutdowns and changes in how Americans lease cars could restrict the supply of used cars for years, preventing meaningful long-term price drops.
And, while prices are coming down, interest rates have been rising. That hits used car shoppers particularly hard.
Tax return season isn’t helping car shoppers as much as it usually does, either. Through the week ending May 5, the IRS has returned $263 billion to taxpayers. The number of refunds issued is down 1% from last year, 8% less has been disbursed than last year, and the average refund at $2,803 is down 7% year over year.