An index that tracks used-car prices hit a record high for the second consecutive month in August, bucking historical trends during the summer.
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Wholesale prices for used vehicles jumped about 2 percent month-over-month in August on a seasonally adjusted basis, according to auto auction company Manheim. That brought Manheim’s Used Vehicle Value Index to 139.7, a 6.4 percent gain compared to a year ago and the highest level in the index’s 20-year history.
More consumers are choosing to buy used vehicles rather than more expensive new models, according to Manheim. Kelley Blue Book, a division of Manheim’s parent company Cox Automotive, recently said the average transaction price for a new vehicle climbed to $35,541 in August.
“The strange summer price appreciation in used cars is partly a function of a strong economy at its peak, with mounting affordability challenges for the consumer that favor growth in used vehicle sales at the expense of new,” the company said in a news release.
The used-car market has seen upward pricing trends for over a year, even though analysts had projected weaker values in anticipation of more off-lease cars, trucks and SUVs arriving on dealership lots.
Worries over higher interest rates and the possibility that U.S. tariffs will cause new-vehicle prices to increase in the future helped drive consumer demand this summer, Manheim noted. Meanwhile, wholesale used-vehicle supplies have flattened.
Compact and midsize passenger cars saw the largest price increases last month of more than 8 percent. Prices for used vans, SUVs and pickup trucks also climbed, with SUVs and crossovers posting 6 percent growth.
Sales of both new and used vehicles were flat compared to August 2017.