Used vehicle pricing has increased significantly, so on today’s show, we’ll find out what’s behind the increase and what dealers can do. We’re pleased to welcome Zo Rahim, Manager of Economics and Industry Insights at Cox Automotive.
The mid-month Manheim Used Vehicle Value Index was recently published and shows about a 50% increase over last year and hit a record high. Rahim begins the conversation by explaining what exactly is index measuring. Rahim says index measuring is what dealers are paying for inventory in the wholesale market. He continues on to say, people have to look past the index and look at the month-to-month and year-to-year comparison. With vehicles being sold at an all-time high, he believes the pricing in the wholesale market is incredibly strong because it’s driven by consumer demand in the new and used vehicle retail market.
Rahim says the strongest performance segment is the pickup truck market. Although they are the most underrepresented in the wholesale market.
Rahim adds that there are many factors at play that are causing skyrocketing wholesale prices. He says it’s consumer demand for both new and used vehicles, stimulus checks, and tax refunds.
Wholesale prices play a huge role in what happens in the retail markets. With summer right around the corner, wholesale prices will continue to rise. Rahim believes, in the second half of the year, we may see higher levels of depreciation towards the used vehicle market, especially for the wholesale units. The fall and winter seasons aren’t traditionally seasonal environments for used retail demand, and supply is tight.
Rahim wraps up the conversation by telling dealers to make sure they have the right inventory mix to support their local markets demands and the type of vehicles consumers in the local market are looking for.