ACVA - Used car prices jumped again in February but are still lower than a year ago

2023-03-07 10:11:13 ET

Wholesale used-vehicle prices increased 4.3% on a month-to-month basis. The increase was the largest for the full month of February since 2009, although part of was due to a seasonal adjustment. Looking at the bigger picture, the Manheim Used Vehicle Value Index was down 7.0% from a year ago. The non-adjusted price change in February was an increase of 3.7% compared to January, moving the unadjusted average price down 5.6% year over year.

Over the month of February, daily MMR Retention, which Manheim noted is the average difference in price relative to the current MMR, averaged 100.1%. That means market prices were very close to MMR values. The average daily sales conversion rate increased to 64.3% and was said to be above normal for the time of year.  The higher conversion rate indicated that the month saw sellers with more pricing power than what is typically seen for this time of year.

Of note, all eight major market segments continued to see seasonally adjusted prices that were lower year over year in February. Pickups had the smallest decline at 3.9%, with compact cars, midsize cars, and vans losing less than the overall industry year over year. Luxury cars, SUVs, and sports cars lost 10.1%, 8.6%, and 7.4%, respectively, compared to last February. However, all eight major segments saw significant price increases compared to January, with gains of between 3.3% and 5.9%.

Analysts thinks the increase in used car prices in February from January will add to the argument that the Federal Reserve's policy-making committee needs to be vigilent against inflation. The used car prices will factor into the CPI report for March, which will be released in mid-April.

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