Used car prices at the wholesale level declined this spring

June 7 (UPI) -- A lagging indicator on used vehicle prices at the wholesale level showed a decline, though that rate of decline was expected to slow, a U.S. index published Wednesday showed.

Wholesale prices according to Cox Automotive and the Manheim Used Vehicle Value Index showed a decline of 2.7% from April to May. Prices were 7.6% lower than a year ago, their data showed.

Chris Frey, the senior manager for insights at Cox, said the pace of decline could show a slowdown later in the year given trends in auction prices, though the slowdown in May marked the second month in a row.

"Two consecutive reads in either measure do not a trend make, as used retail inventory is still below last year, and that tends to keep buyers at the auction, supporting prices," he said.

The price for luxury cars is down 10.8%, SUVs were down 8% and mid-sized vehicles were off by 7.9% relative to year-ago levels to April.

Sales, however, also saw a decline, with the index showing an 11% contraction from May 2022 levels. Over the last four weeks, retail prices for a used vehicle moved 0.8% higher.

Apart from the 4.4% increase month-on-month to April, federal data show consecutive declines in the price for a used vehicle. Prices at the retail level are down 6.6% over the 12-month period to April, the Commerce Department reported.

The reverse is true, however, for new vehicle sales. April was the only month for a decline this year and prices are up 5.4% annually to April.

In a competitive market for electric vehicles, however, Tesla cut prices in the U.S. market for the second time in April, slashing the price of its Model Y sports utility vehicle and base Model 3.

The price of the company's base Model Y is 29% cheaper than it was at the start of 2023, while the Model 3 has dropped 15% in price following the series of cuts.