September Was Not a Great Month for Used Car Shoppers

We’ve discussed the issues facing used vehicle buyers a fair bit in the recent past, but September data shows the market’s quickly rising prices did not cool off with the arrival of autumn. Wholesale used vehicle prices continued to climb, with the Manheim Used Vehicle Value Index reaching its highest point in history.

Breaking down the numbers, it appears used car shoppers with the least amount of money to spend are seeing the greatest increases in price. It’s a cruel world out there.

According to Cox Automotive, the Manheim index rose 3.7 percent last month, year over year. Starting in the middle of June, an “abnormal summer bounce” pushed used vehicle prices higher, and a recent uptick in depreciation hasn’t exactly left a raft of smoking deals in its wake. The price of an average 3-year-old vehicle is still 4.5 percent higher than if normal depreciation had occured.

Manheim Consulting says its index rose to 139.9 in June, marking the third straight month of record used vehicle values. Depending on what you were in the market for, you either paid close to the normal amount, on average, or way more. Of all vehicle classes, luxury cars showed the smallest year-over-year increase in price (0.1 percent). Van pricing increased the second least, at 1.2 percent.

It’s in the more popular categories that buyers had to dig deeper. Value-holding pickups and SUVs/crossovers increased by 2.4 percent and 2.7 percent, respectively, as the amount of content being flung at new models knows no bounds. As new vehicle volume grows in these categories, it’s pushing the average price of used vehicles ever higher.

Unfortunately for the thrifty used vehicle buyer, a number of factors made September, and in fact this entire summer, a bad time to go searching for an economical compact or midsize sedan. New car buyers don’t want ’em, but it’s the opposite situation in the used market.

“This year, the abnormal rise in value seems to be mostly man-made, driven primarily by consumer demand, rising interest rates, and threats of tariffs,” said Jonathan Smoke, chief economist for Cox Automotive. “Consumers and dealers alike had reason to believe the cost of buying a vehicle would be more expensive later in the year, so there was a strong sense of urgency and ‘buy now’ mentality in both new and used.”

The steady collapse of the passenger car market means fewer sedans heading to auction at the same time consumers are entering the used market in search of a less-expensive option. Last month, midsize sedans on the used market rose 4.4 percent in price, year over year. Compact cars handily outstripped the rest, with an average price 7.1 percent higher than a year before.

[Image: General Motors]