Used car values spent the last two years on a roller coaster. They’ll calm down in 2023, according to Kelley Blue Book parent company Cox Automotive.
The Manheim Used Vehicle Value Index tracks the prices car dealers pay wholesale for the used cars they later sell retail. It fell 14.9% during 2022. That’s the largest one-year decline in the history of the index, which dates to 1995.
But it fell from record highs.
“These last three years have been extremely volatile for the market, and these declines follow record increases,” points out Cox Automotive Chief Economist Jonathan Smoke. “In December 2021, we were up 47% year over year. The pre-pandemic levels will likely never return, but all indicators point to reaching equilibrium in the second half of 2023.”
Prices will normalize, Cox Automotive says, because inventories have begun to normalize. Car dealers measure their supply of used cars with a metric they call days of inventory – how long it would take to sell out of cars at today’s sales rate if they couldn’t acquire more.
In December, Cox Automotive estimates, the average dealership had 52 days’ supply. That’s nearly back to pre-pandemic numbers.
This story originally ran on KBB.com.