Used Car Prices Slide in Q3 as Demand for Fuel-Efficient Vehicles Surges

Used vehicle prices are projected to drop more sharply this quarter than previously anticipated, driven by escalating fuel costs and broader inflationary pressures that are squeezing American consumers. On Tuesday, Cox Automotive revised its forecast for the Manheim Used Vehicle Value Index downward, reducing the expected annual increase from 2% to just 0.2%.

The adjustment follows a 0.6% decline in the index during September, marking the first time since early last year that the monthly figure failed to surpass its year-ago level. While the historical average for the Manheim index typically reflects a 2.3% year-over-year gain, last year’s performance was muted at only 0.4%, following the extraordinary price spikes seen during the pandemic era.

Data indicates that non-adjusted wholesale used-vehicle prices fell 1.2% annually in September and dipped 1.3% from August, signaling an acceleration in depreciation throughout the third quarter. Jeremy Robb, chief economist at Cox Automotive, attributed the shift to a combination of geopolitical instability and monetary policy. “The first half of the year actually showed more appreciation than usual, even in the face of higher fuel prices. But with the conflict in the Middle East ongoing, diesel prices at record highs, and interest rates climbing rapidly, increasingly worrying both businesses and consumers, wholesale prices have felt the sting,” Robb stated.

The Manheim index serves as a critical barometer for the auto market, tracking pricing trends at U.S. wholesale auctions where retail consumer prices typically follow. As the market evolves, Cox noted that rising sales of electric vehicles and increased off-lease volume are reshaping dynamics. Values for EVs and smaller, fuel-efficient models have strengthened during the quarter, contrasting with weak performance in the large truck and SUV segments.