Used auto prices are down for a third straight month, setting the expectation that the sector will contribute to further signs of easing in June’s Consumer Price Index print due on Wednesday.
Wholesale used vehicle prices decreased by a record 4.2% in June from the previous month, according to Manheim Market Insights. The Manheim Used Vehicle Value Index, a closely watched measure of prices, plunged 10.3% year-over-year in June.
The drop eases concerns of sticky inflation in a major category outside of food and energy ahead of the release of the Bureau of Labor Statistic’s monthly CPI report on Wednesday.
Used vehicle prices have soared over the last couple of years amid inflation and supply chain challenges, which caused temporary lapses in auto production. Before the pandemic, the average price of a used auto was $19,827 compared to $26,686 in May 2023 — a 35% difference, according to Cox Automotive.
Analysts had been expecting auto prices to show signs of easing for the month of June.
“If you go back a year ago, all I got were emails from them [auto sellers] trying to buy my used cars. Now I’m getting ads for getting new cars from them. Discounts are coming back,” Peter Tchir, macro strategy head at Academy Securities, told Yahoo Finance Live on Monday.
Used vehicle prices are down 4.2% year over year, but their month-over-month trajectory has been volatile.
CPI, excluding food and energy, rose 0.4% in May, mainly because of increases in the cost of shelter, followed by used cars and trucks.
The auto sector reaccelerated in May and April after prior months of contraction.
The CPI print is expected to show prices rose 3.1% annually in June, marking a 0.3% increase from the previous month.