NewsNational News

Actions

Used car prices, demand dropping as high interest rates settle in

Biz Used Cars
Posted at 9:58 AM, Dec 09, 2022
and last updated 2022-12-09 12:58:20-05

With interest rates continually rising, the wholesale cost of used cars continues to drop.

According to the Manheim Used Vehicle Index, costs have dropped about 16% from January. The index uses pricing trends by wholesalers to determine costs. From November 2021 through November 2022, there has been a 12.4% drop in costs.

Drying demand has helped inventory catch back up.

But dealers reported to Cox Automotive that the upcoming months could be rough for sellers.

“High interest rates and a generally slowing economy are clearly weighing heavily on U.S. auto dealers right now,” said Jonathan Smoke, Cox Automotive chief economist. “Dealers are normally optimistic, so the drop in the 3-month outlook to a new low in our survey history is particularly noteworthy. As the year began, dealers were telling us about one obvious problem: Inventory. Now, as 2022 comes to a close, it’s all about the economy and interest rates.”