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Used Vehicle Prices Drop as Other Costs Remain High

The most recent Consumer Price Index from the U.S. Bureau of Labor Statistics shows a slight but promising decline in used car prices.

December 14, 2022
Used Vehicle Prices Drop as Other Costs Remain High

The most recent Consumer Price Index from the U.S. Bureau of Labor Statistics shows a slight but promising decline in used car prices.

IMAGE: Getty Images

2 min to read


Vehicle prices have skyrocketed to record prices since the pandemic began because of reduced inventory amid heightened demand. But there’s a silver lining appearing in the clouds—at least for used car buyers, finds the most recent Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics.

The November CPI shows a slight but promising decline in used car prices. The report reveals that while the overall CPI rose over 7% year over year in November, used car prices fell 3.3% from 2021 prices.

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This news follows reports that wholesale prices for used cars dropped 15.6% since January, according to the Manheim Used Vehicle Value Index. In normal times, a wholesale drop would have driven a faster decline in used car prices. But demand for vehicles remains high, and dealers hold inventory they purchased at far higher prices, so used car vehicle prices will drop slowly over time.

Though used car prices show some pricing promise, transaction prices for new vehicles remain elevated with no signs of falling. In fact, the average new car transaction price rose slightly to $48,281 in October and many new models still sell for over MSRP.

Dropping prices are a boon for buyers but not for used car retailers. Carvana stock tanked recently, and CarMax has reported selling 15,000 fewer vehicles this year than in 2021.

Economic conditions remain poor as well, which also could affect new and used vehicle sales.

The CPI reports the food index increased 0.5% in November, with the food at home index also rising 0.5%. The energy index decreased 1.6% as did the gasoline index, natural gas index, and electricity index in November.

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However, the index for all other items rose 0.2% in November, after rising 0.3% in October. The indexes for shelter, communication, recreation, motor vehicle insurance, education, and apparel were among those that increased in the last 30 days. Only used cars and trucks, medical care, and airline fares indexes dropped in November.

Over the last 12 months, the “all items less food and energy index” rose 6%, while the energy index increased 13.1%, and the food index increased 10.6%.

Originally posted on Auto Dealer Today

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