Wholesale prices are down almost 10% YoY. New car production is up and new car inventory is returning to normal. Prices have started to drop with the reintroduction of incentives.
All this points to supply returning and demand falling away with increased interest rates, high inflation, and the imminent return of student loan payments. Accordingly, prices should continue to fall. Hopefully we see a significant reduction in pricing and a return to reasonable affordability of vehicles.
This is a good sign. Manheim Auto Index shows the same (not sure if Cox and Manheim are connected). However, I am pessimistic about just how long dealers will be willing to stick to the current pricing model. I think even if we see the economic landscape shifting now, it could be upwards of a year before we start seeing meaningful decreases in the Used Car market. Consumer sentiment often does not react as quickly as the underlying economics.
