An index that tracks used-car prices hit a record high in July, as strong demand and limited inventories continued to impact the market.
Continue Reading Below
Manheim said Tuesday wholesale used-vehicle prices climbed 1.51% on a seasonally-adjusted basis last month. The increase in prices lifted the Manheim Used Vehicle Value Index to 136.9, the highest level ever recorded by the auto auction company. The index is also up 5.1% in the past year.
“The strange summer price appreciation in used cars is partly a function of a strong economy at its peak,” Manheim said in a news release, adding that more consumers are choosing used vehicles over new models.
Analysts have expected used-car prices to drop as more vehicles come off leases and arrive on dealer lots. However, robust sales have lifted prices in recent months, even though wholesale prices typically fall in the spring and summer. Last month, Manheim said used-vehicle prices closed the second quarter in a stronger position than expected.
In addition to consumer demand, Manheim noted that concerns over potential import tariffs, which could lead to higher prices for new vehicles, have driven pricing trends this summer.
“Higher prices and the related declining level of supply create a psychological feedback loop for consumers, encouraging buying now with the expectation that prices may be higher later,” the company said.
Compact and midsize cars outperformed other segments, recording price increases of 5.2% and 7.2% year-over-year, respectively. Prices for SUVs and crossovers were up 4.5% in July.
Cox Automotive, Manheim’s parent company, estimated that total used-vehicle sales jumped 3%. New-vehicles sales fell 3% during the same month.