For most of this year, both new and used vehicle prices have continuously reset records on a monthly basis, both as a result of the ongoing semiconductor chip shortage. This has landed used vehicle prices in uncharted territory, quite literally, a phenomenon that doesn’t figure to end until the chip shortage eases at some undetermined point in the future. So it should come as no surprise that new Cox Automotive data reveals that used vehicle wholesale prices recently hit an all-time high as well.
Used vehicle wholesale prices jumped 5.3 percent in September, which pushed that mark to an all-new record. However, there are signs that the used vehicle market is cooling off. New vehicle sales began to decrease back in August, while used vehicle sales have also plummeted dramatically over the last couple of months. That trend continued in September as total used vehicle sales dropped 13 percent year over year.
At the same time, inventory has decreased significantly, as used retail days’ supply has dropped from a peak of 114 days in April to 37 days in September, which is below the typical average of 44 days. Wholesale supply has sunk even more dramatically, from a high of 149 days in April to just 18 days last month.
In the meantime, consumer confidence has dropped for three straight months and was down 5.1 percent in September, while the number of consumers who plan on purchasing a vehicle in the next six months declined to its lowest level in eight months. While dropping inventory levels have caused prices to rise to new heights recently, a significant decline in sales and demand seems destined to have an impact on those prices in the coming months.