Report: Used car prices are down but still elevated

Car buyers of all sorts have had a bumpy ride over the last couple of years, but things are starting to look up – at least for used car shoppers. Earlier this week, the United States Bureau of Labor Statistics (BLS) released its Consumer Price Index (CPI) for November 2022, which showed a slight but promising decline in used car prices.

The BLS found that while the overall CPI climbed by more than 7 percent in November from the same time a year before, used car prices fell by 3.3 percent from 2021. This news comes after reports that wholesale prices for used cars dropped 15.6 percent from January, according to the Manheim Used Vehicle Value Index. That drop should have driven a subsequent decline in used car retail prices, but the fall is unsurprisingly slow. Dealers still have plenty of inventory purchased at higher prices, so it will still take time for used prices to come back to earth.

Unfortunately, for new car buyers, the story is not the same for factory-fresh vehicles. In late October, the average transaction price for a new car reached $48,000, and new models of all types are still selling for thousands more than before the pandemic. New car inventory has shown signs of improving, but again, we’re talking about incremental changes that will take time to make an impact.

All of this turbulence is terrible news for used car retailers. Carvana’s stock has tanked, leading many to speculate that bankruptcy or another significant move is coming. CarMax is selling fewer cars, reporting almost 15,000 fewer vehicle sales this year compared to 2021. The trickle-down effects of the current market impact several other industries, including rental cars and small businesses that rely on fleet vehicles. Many can’t find or buy the new cars they need, leading to delays in business operations and fewer rental options for travelers. And, of course, everything costs more.

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