Used vehicle prices experienced a dip in April, marking the first decrease since October, as gasoline prices surged amid geopolitical tensions in the Middle East. Cox Automotive reported that its Manheim Used Vehicle Value Index declined by 1.6% last month when compared to March. On a year-over-year basis, the index was up 1.8% from April of the previous year.
Cox Automotive highlighted that affordability continues to be a significant factor for car buyers. This concern is reportedly driving increased interest and demand for both older, more budget-friendly used vehicles and all-electric vehicles (EVs) at Manheim auctions.
Gasoline prices saw a substantial increase, reaching a national average of $4.30 per gallon by the end of April, an increase of $1.12 per gallon compared to the same period in the prior year, according to AAA. These prices have continued to climb, with the national average hitting $4.56 per gallon as of Thursday.
Jeremy Robb, chief economist at Cox Automotive, noted the impact of the ongoing conflict in the Middle East on energy prices. "The price of gas just hit a high for the year and is up 47% since the end of February," Robb stated in a release. He added, "Those higher prices are soaking up a lot of the extra money in consumers' pockets, and currently there's no end in sight."
Historically, retail prices for consumers tend to follow trends in wholesale prices. Cox Automotive forecasts that used vehicle wholesale prices will increase at a historically stable rate of approximately 2% for the entirety of this year.
As of March, the average listed price for a used vehicle stood at $25,390, a slight increase of about $100 from February, according to Cox data. While the average listing price for a used EV remains over $9,200 higher than the overall used vehicle market average, recent spikes in gasoline prices have reportedly boosted EV sales.
Retailers of both new and used vehicles have observed a rise in EV sales, a trend that follows a slowdown experienced after the expiration of federal incentives under the Trump administration last year. Manheim's index for electric vehicles showed a year-over-year increase of 7.2% and a 1.4% rise from March.
The decline in used car prices in April comes after a robust start to the spring selling season. Cox Automotive attributed this earlier strength to consumers utilizing higher tax refunds to purchase or finance used vehicles.
