Vehicle prices continue to rise a downward trend in July — the highest of any major category in the consumer price index (CPI) in the past year as the auto market returns to “normal” after pandemic-induced inflation.
Used car prices fell 2.3% from the previous month in July and 10.9% from the previous year, data from the BLS showed on Wednesday. New auto prices fell 0.2% in July and 1.4% from the previous year.
Compared to their peak in February 2022, prices paid for used vehicles have now fallen by 19.4%. Used car prices rose by more than 40% annually in both June and July 2021, and again in January and February 2022. Prices for used cars And trucks are still 16.9% higher than in July 2019.
In July, headline CPI rose 0.2% from the previous month and 2.9% from the previous year, which was a slight slowdown from the 3% annual price increase in June and also higher than economists’ expectations of a 3% annual increase.
The continued downward pressure in the used and new vehicle The market is created by increasing inventory, which leads to lower prices – especially when it comes to used cars.
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“These trends in the used car market are a direct reflection of the dynamics in the new car market as inventory levels normalize,” said auto research firm Edmunds said in its second quarter vehicle price report. “A buildup of new vehicles on lots over the past year has been the catalyst for discounts and incentives on aging inventory. While prices on these new cars have fallen, values on newer used vehicles have fallen accordingly.”
A return to normality in car prices is a welcome change for buyers, although traders may feel a slight pinch because of this. But despite falling prices and rising inventories, automakers such as ford (F), GM (GM), And Toyota (TM) have continued to show strong dealer-level sales. GM in particular expects only a modest decline in average transaction price.
There is good news for second-hand car dealers: The Manheim Used Vehicle Value Index (MUVVI) rose slightly in July compared to Junewhich indicates more demand for used cars. The MUVVI tracks the prices that dealers pay at the wholesale level, and the price action here generally trickles down to the consumer market.
Manheim analysts believe a smaller amount rented vehicles entering the used market could continue to drive up prices. The question: is this just a blip on the radar, or a continued upward trend in used vehicle prices?
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and further Instagram.
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