New data shows that used car prices that soared during the pandemic are now stubbornly holding up despite recent weakness in the market.
According to the highly watched Mannheim Used Vehicle Value Index (which tracks wholesale used car prices at dealer auctions), used car prices rose 3.7% in February compared to January this year , which was also higher than the previous month. Mannheim says the 3.7% increase in February was the biggest increase for the month on record since a 4.4% increase in February 2009.
Mannheim says this jump in prices isn’t specific to the time of year.
“American auto markets generally see[s] A strong spring surge in used vehicle sales and prices as demand picks up, partly driven by tax refund season. The surge this year came earlier than anticipated, said Jeremy Robb, Cox Automotive’s senior director of economic and industry insight. yahoo finance, “We saw strong retail demand in January and early February, which surprised some dealers who were tight on inventory. The initial surge sent many dealers rushing to the wholesale market to replenish inventory, and this has led to a spike in wholesale prices.
After the index hit an all-time high of 257.7 in January 2022, it has been falling steadily, reaching a low of 217.6 in November of 2022, though it has been climbing back since ending February’s big pop. .
While February’s reading of 234.5 is down 7% year-on-year, the overall index still remains elevated compared to pre-pandemic levels. The index was seen at 156.6 in February 2020.
In addition to external factors such as tax refunds boosting purchases, spring usually sees some uptick in purchases due to warmer weather, the arrival of the summer traveling season, and more people flocking to dealerships in search of new rides. .
Also peculiar to their particular market is the fact that America’s aging fleet of cars is not being swapped out fast enough. S&P Global Mobility has found that the average age of cars and trucks on the road is set to reach 12.2 years in 2022, an all-time high. S&P says this is the fifth year in a row the average age of vehicles has increased.
A global pandemic, ensuing parts shortages, and even the war in Ukraine have sent automotive supply chains into chaos, leaving inventory of new cars up for purchase. This has been accompanied by a reduction in supply and higher prices for new cars, which remain high and are still climbing. Mannheim’s new vehicle sales figures show an increase of 8.7% year-on-year and 9.1% month-on-month in February.
It looks like the cars Americans have been buying lately — whether it’s a lack of supply or high prices — haven’t quite finished yet.
Prasad Subramanian is a reporter with Yahoo Finance. you can follow him Twitter and on Instagram,