The pace of wholesale used vehicle price increases slowed in December, but prices still increased, hitting new record highs. What’s more, analysts expect prices to increase more in the spring.

Cox Automotive reported that its Manheim Used Vehicle Value Index, which tracks vehicles sold at Manheim's U.S. auctions, rose 1.6% in December compared to November. When compared with December 2020, the December 2021 index was 47% higher.

Still, Manheim showed the December number slipped 1.1% compared with November on a non-adjusted basis. The index rose 43% on a non-adjusted basis for all of 2021, Cox reported.

Cox Automotive Chief Economist Jonathan Smoke told Automotive News that average 2018 model year wholesale prices softened in the last five to six weeks of 2021, while retail prices increased.

Cox Automotive analysts said 2021 was marked by two long cycles of appreciation in used-vehicle values — one from February to May and another from September to November. During this timeframe, the Manheim index set record after record.

Frenzied demand fueled price growth in the spring, spurred by economic recovery, tax refunds and government stimulus payments. But tight supply coupled with extreme demand drove record-setting used-vehicle prices in the fall.

Looking ahead Cox Automotive predicts wholesale used-vehicle prices will continue its growth trajectory this spring. Smoke projects a 3% to 5% increase from today’s levels, with a peak at the end of April or early May.

Cox analysts forecast that depreciation will happen in the back half of 2022.

The company, however, doesn't expect a collapse in demand nor the potential for a large price correction. It estimates that the December 2022 Manheim index will dip 3% from December 2021.

Black Book’s Used Vehicle Retention Index saw a comparable surge. The index increased to 195.7 points in December— 52% above where it was December 2020. Black Book reported the index rose 3.1% from November to December.

Black Book saw declines in wholesale prices across multiple segments in the last two weeks of 2021. Alex Yurchenko, chief data science officer at Black Book, reported demand in wholesale channels slowed at year's end because new-vehicle inventory leveled off and consumer demand eased

“We expect a stable wholesale market in January, even as the number of COVID cases increases significantly across the country," Yurchenko said in a news release.

Cox put used-vehicle supply at retail at 54 days at the end of December, higher the normal 44 days; wholesale supply at an estimated 33 days, higher than the normal 23 days.