Used Car Values Hit Record Highs

J.D. Power reports the seasonally adjusted index hit 216.7, a 38.7% increase over November 2020, when the index was at 137.5 

November’s index score also bested October’s by over 9 points.

J.D. Power attributes used vehicle price increases to lagging “new vehicle production and inventory constraints, elevated levels of new vehicle customer-facing transaction prices, tightening levels of used supply and increased dealer focus on used-vehicle operations.”

The firm adds, “Wholesale prices at the industry level increased nearly 1.5% in November, which was not only the best performance ever for the period but also a significant improvement vs. the previous five-year average decline of 3%. While wholesale prices rose again, the pace slowed from increases in September (5%) and October (3.5%).”

The respective Black Book and Manheim wholesale vehicle price indices also reached a third consecutive record month in November. 

The Manheim Used Vehicle Value Index hit 232.5 in November, marking a 43.5% year-over-year increase when adjusted for mix, mileage and seasonality. This marked a 43.5% year-over-year increase. Wholesale prices climbed 3.9% from October.

Without the adjustments, wholesale prices increased 43.8% year-over-year and 1.9% month-over-month, Cox Automotive said.

The Black Book Used Vehicle Retention Index hit 189.9 points in November, marking a 9.7-point (or 5.4%) month-over-month increase and a 45.4% year-over-year spike.

“With no short-term resolutions to new inventory problems, dealers are continuing to spend money on used inventory, pushing wholesale prices up to new records across all segments in November,” Black Book chief data science officer Alex Yurchenko said in a news release.

“Cars of all sizes and vans had the largest increases as used and new inventory in those segments declined to much lower levels compared to other segments of the market,” Yurchenko said. “We expect the used-car prices to increase again in December, but at a much lower rate as the volume of new inventory is leveling off and consumer demand is softening a bit with record breaking used retail prices.”

Used-car prices also are moving up. The J.D. Power Valuation Services report noted a 1.8% month-over-month and nearly a 23% year-over-year gain in retail used-car prices at franchised dealerships.

An analysis of over 1.9 million November sales of used vehicles ages one to five by iSeeCars.com found the vehicles fetched an average of $31,848, 27.9% higher than the average selling price in November 2020. Further, in October, prices for the same group of used vehicles rose 24.9% year-over-year, according to iSeeCars.

Meanwhile, auction sales volumes remain challenged.

There have been 3.62 million wholesale auction sales this year; a figure that is 13% softer than the same period of 2020 finds J.D. Power.

Compared to pre-pandemic sales, J.D. Power says they’re off 25% to 30%.

November saw 234,000 auction sales, a 24% year-over-year decline and a 22% month-over-month drop.