From Cox Automotive News - June 20, 2024
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It is muggy and hot in the Motor City this week, but like all good Midwesterners, we know the weather changes around here – this heat wave may last a while, but we can wait.
For those of us closely following the auto industry, there seems to be a lot of waiting these days. Waiting for inventory to build. Waiting for prices to moderate further, for incentives and discounts to improve. Waiting for the Fed to shift its stance on interest rates. Waiting for November and an eventual outcome in a national election.
For some, the wait has been rewarded. New-vehicles prices have ridden a long-term trend lower, as improved inventory keeps downward pressure on prices. As we reported last week, average transaction prices in May were lower year over year for the eighth straight month. Most people don’t recognize the anomaly year-over-year ATP declines are, much less eight in a row. Looking across 10 years of monthly Kelley Blue Book pricing data, it has happened only eight times.
Waiting for used retail prices to decline? That’s happening too. At the beginning of June, the average used-vehicle listing price was $25,670, according to our vAuto Live Market View data, lower by 6% versus last year. Retail used-vehicle listing prices have been consistently lower year over year through the first five months of 2024, and are lower now than they were in January.
Wholesale used vehicle values continue to decline as well. Yesterday, we posted the mid-month look at wholesale values – our Manheim Used Vehicle Value Index (MUVVI) – and it showed continued price declines. We've been up and over the mountain top, with the peak in late 2021 and now down to a level last seen more than three years ago. Wholesale values are down 8.5% year over over in mid-June, with all segments lower. And if you really want to see tumbling prices, check out wholesale EV values.
In a recent Smoke on Cars post, our Chief Economist Jonathan Smoke wrote:
A deflationary spiral occurs when consumers delay purchases with expectations of lower prices, which reduces demand, builds up supply, and leads to the lower prices they were expecting."
The wait-and-see market will be a key theme of the Cox Automotive Mid-Year Review. The call is scheduled for next Tuesday, June 25, at 11:00 am ET. We hope you will listen in. If you have not already, please RSVP here.
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