Sales of used cars, which have been red-hot for several months, cooled a bit in June, according to the latest report from Cox Automotive.
While sales last month were still strong, they were down considerably from April’s frenetic pace that pushed the price of the average late-model used car to record levels. Jonathan Smoke, chief economist at Cox Automotive, said sales were consistent with June 2019 totals, meaning it was more of a normal month.
“We initially estimate that used-vehicle sales were down 11.1% from the year-ago June, which was up against one of the two strongest months for used sales during the initial reopening phase of the pandemic last year,” Smoke wrote in his Auto Market Weekly Summary. “Compared to 2019, total used-vehicle sales were down 4.7%. The June used SAAR was 39 million, down from 43.6 million last June and down from May 2021’s 40.0 million rate.”
Certified pre-owned (CPO) sales in June slowed similarly to the rest of the retail market. CPO sales declined 9% from a year ago and were down 11% from May. CPO sales are up 18% year-to-date compared to the same period last year. June CPO sales were down 0.7% compared to June 2019.
Better deals may be on the horizon
The good news for people in the market for a used car is that the slowdown in sales may translate into better deals on used car lots. Prices are already coming down at the wholesale level.
The Manheim Used Vehicle Value Index (MUVVI) edged 1.3% lower for the month after setting new records in each of the prior four months. According to the data, retail used vehicle prices will probably reach their peak this month, meaning it might pay to put off a purchase for a month or two.
The index indicated that June’s average price was more than one-third higher than in 2020. Prices held relatively steady across all major market segments, but consumers found the least amount of wiggle room when negotiating for a pickup truck.
Demand for used cars has been exceptionally strong in 2021 because of the computer chip shortage affecting the auto industry. Manufacturers have not produced as many new cars as in years past, so demand has been exceptionally heavy for used cars.
Prices have followed closely behind rising demand. At the beginning of May, the average price for a used car or truck was a record $22,568.