Vehicle prices continued a downward trend in July — essentially the most of any major category within the Consumer Price Index (CPI) over the past 12 months because the automotive market continues its return to “normal” following pandemic-fueled inflation.
Used automotive prices fell 2.3% over the prior month in July and 10.9% from the prior 12 months, data from the BLS revealed on Wednesday. Latest automotive prices fell 0.2% in July and 1.4% from the prior 12 months.
In comparison with their peak in February 2022, prices paid for used vehicles are actually down 19.4%. Used automotive prices rose greater than 40% annually in each June and July 2021, and again in January and February 2022. Prices for used cars and trucks are still 16.9% higher than in July 2019.
In July, headline CPI rose 0.2% over the previous month and a pair of.9% over the prior 12 months, which was a slight deceleration in comparison with June’s 3% annual gain in prices and in addition ahead of economist expectations of a 3% annual increase.
The continued downward pressure within the used and recent vehicle market comes as inventories construct up, resulting in lower prices — especially on the subject of used cars.
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“These trends within the used market are a direct reflection of dynamics within the new-car market as inventory levels normalize,” auto research firm Edmunds said in its Q2 vehicle prices report. “A buildup of latest vehicles on lots over the past 12 months has been the catalyst for discounts and incentives on aging inventory. As these recent automotive prices trend downward, values of newer used vehicles have correspondingly declined.”
A return to normalcy for auto prices is a welcome change for buyers, though dealers could also be feeling a slight pinch consequently. But despite falling prices and rising inventories, automakers like Ford (F), GM (GM), and Toyota (TM) have still seen strong sales on the dealer level. GM, specifically, is barely expecting modest drops in average transaction price.
There may be excellent news for used automotive dealers: The Manheim used vehicle value index (MUVVI) rose barely in July in comparison with June, indicating more demand for used cars. The MUVVI tracks prices paid by dealers on the wholesale level, and price motion here generally trickles all the way down to the buyer market.
Manheim’s analysts consider a smaller quantity of leased vehicles coming to the used market may proceed to bump prices higher. The query: Will this just be a blip on the radar, or sustained upward draft in used vehicle prices?
Pras Subramanian is a reporter for Yahoo Finance. You’ll be able to follow him on Twitter and on Instagram.
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This Article First Appeared At www.autoblog.com
