The latest government report on consumer prices shows that prices for used cars and trucks are still rising faster than the cost of a new vehicle. The latest Manheim Market Report (MMR) suggests that may not end anytime soon.
The report tracks used vehicle prices at the wholesale level – what dealers pay when they purchase a used car or truck at auction. In November, it found that wholesale prices were still rising but at a slightly slower pace.
For the entire month, the wholesale price of three-year-old vehicles rose 1.9%. The average daily sales conversion rate fell to 59% but is still high for this time of year. The data suggests that used car buyers are undeterred by rising prices and were aggressively buying last month.
Compared to 2020, all major market segments saw seasonally adjusted price increases in November. Vans had the largest price increase. The pickup and luxury car segments lagged behind the overall market.
What’s telling is that on a month-over-month basis, no segment saw declines, with compact cars outpacing the market and remaining segments. A look at the rental car industry supports the idea that used cars are in increasingly short supply.
Fewer rental cars heading to auction
Mark Schirmer, director of public relations for Cox Automotive, said the company doesn’t cover the rental car industry per se, but it does keep track of the number of vehicles that rental car companies are sending to Manheim Auctions to be sold off.
“That number is significantly down in 2021, suggesting that rental car companies are holding onto their existing inventory,” Schirmer told ConsumerAffairs. “The vehicles that are arriving for auction have also been higher-mileage models.”
Schirmer says fewer used cars being on sale, and higher mileage on those that are being sold, suggests that the rental car industry is holding onto cars longer because it is harder to purchase new replacements.
According to Cox Automotive estimates, total used vehicle sales were down 2% year-over-year in November. That may be partly due to higher prices and partly because of fewer used cars and trucks being sold at auction.
New vehicle sales were down even more – 17% – for possibly the same two reasons. Compared to October, sales were off 4%.