January Used Vehicle Price Update
The Manheim Used Vehicle Value Index for January 2022 was 236.3 versus 236.2 in December and 163 in January 2021 (a 45% increase YoY). The non-adjusted price change in January showed a decline of 0.9%.
Weekly data from January via the Manheim Market Report (MMR) showed that value decreases accelerated at the end of the month. Some online accounts that focus on automobile auctions have been sharing the message that auctions are starting to slow down.
The volume of sales at the start of 2022 has also shown some slowing. Manheim estimates that used SAAR (seasonally adjusted annualized rate) to be 39.1 million down from 40.8 million in December. Retail used SAAR in down as well at 22.0 million in January compared to 22.3 million in December.
Data from used car dealer software platform vAuto, showed used retail days' supply at 51 days in December below the 2020 level at 54 days. The month's price patterns differed depending on the vehicle's age and category. Price stability was more common in older automobiles, whereas price decreases were more common in newer vehicles.
This used vehicle slowdown does not appear to be caused by an increased availability in new cars. The automobile chip shortages reported earlier last year for new vehicles still exist. The slowdown may be an effect of the reduction in consumer confidence. The Conference Board Consumer Confidence Index. The Index now stands at 113.8 (1985=100), down from 115.2 in December.
The reasons for this reduction in confidence may have been caused by more focus on inflation and the Omicron spike which peaked in mid-January. The Conference Board stated “... concerns about inflation declined for the second straight month but remain elevated after hitting a 13-year high in November 2021. Concerns about the pandemic increased slightly, amid the ongoing Omicron surge. Looking ahead, both confidence and consumer spending may continue to be challenged by rising prices and the ongoing pandemic.”
If you have visited some of the used car auctions and have sine thoughts, please reach out.
Fort Schuyler Advisors