Following record increases in 2021, the Manheim Used Vehicle Value Index (MUVVI) ended 2022 at 219.3, a slight increase from November due to the seasonal adjustment, but down 14.9% year over year. This was the largest decline within one year in the series’ history.
On the non-adjusted side, the price change in December was a decline of 1.9% compared to November, moving the unadjusted average price down 13.1% year over year. Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) increased 0.8% in December from November.
“It’s undeniable that 2022 culminates with unprecedented declines in the MUVVI, but it’s important to look at the bigger picture,” said Cox Automotive Chief Economist Jonathan Smoke, in a Jan. 9 news release. “These last three years have been extremely volatile for the market, and these declines follow record increases. In December 2021, we were up 47% year over year. The pre-pandemic levels will likely never return, but all indicators point to reaching equilibrium in the second half of 2023.”
Manheim Market Report Values See Declines
In December, Manheim Market Report (MMR) values saw larger-than-normal declines, culminating in a 2.2% total decline in the Three-Year-Old Index over the last four weeks. MMR is a valuation tool that tens of thousands of vehicle consignors and dealers use to assess millions of trade-ins each month. It is designed to be highly stable and avoid overreacting to short-term market ups and downs to provide an accurate measure of vehicle valuations regardless of market conditions.
In December, daily MMR Retention, which is the average difference in price relative to the current MMR, averaged 98.6%, meaning market prices were below MMR values. The average daily sales conversion rate increased to 50.7% but remained below normal for the time of year. For example, the daily sales conversion rate averaged 52.2% in December 2019. The lower conversion rate indicated that the month saw buyers with more bargaining power than what is typically seen for this time of year.
Used Retail Vehicle Sales Decline in December, Harken Back to 2021 Patterns
Leveraging a same-store set of dealerships selected by Dealertrack to represent the country, initial estimates are that used retail sales declined 7% in December from November and that used retail sales were down 10% year over year, mirroring November’s performance.
Using estimates of used retail days’ supply based on vAuto data, December ended at 52 days’ supply, down from 54 days at the end of November but slightly higher than how December 2021 ended at 51 days. Leveraging Manheim sales and inventory data, wholesale supply is estimated to have ended December at 31 days, up two days from the end of November and up five days from December 2021’s 26 days.
Last month’s total new-light-vehicle sales were up 4.9% year over year, with the same number of selling days as December 2021. By volume, December new-vehicle sales were up 12.2% from November. The December sales pace, or seasonally adjusted annual rate (SAAR), came in at 13.3 million, a 4.7% increase from 2021’s 12.7 million but down 6.3% from November’s revised 14.2 million pace.
Used and Wholesale Vehicle Market Forecast and Outlook for 2023
Used-vehicle values will see above-normal depreciation for the second-straight year. After historic value increases in 2020 and 2021, followed by above-average depreciation for most of 2022, used-vehicle values are likely to see another year of above-normal depreciation, especially in the first half of 2023. Price trends should normalize in the year’s second half as constrained wholesale supply supports used values and used retail prices fall into a normal relationship with new prices. The Manheim Used Vehicle Value Index is forecast to be down 4.3% year over year in December 2023.
2023 Poised to Set Electric Vehicle Sales Records, Manheim Prepares for Influx of Electric Vehicles
It’s anticipated that more than one million new electric vehicles will be sold in the United States this year, setting a record. Manheim volumes generally reflect new-vehicle sales, with a time lag of about three to four years, and the company has been preparing for increased EV sales for several years.
In 2021, Manheim invested nearly $100 million in facility, innovation, and process improvements to deliver a more connected client experience. EV infrastructure and initiatives were a key piece of this investment.
Efforts underway include a Manheim- and Cox Mobility-trusted battery health score poised to lead the industry in measuring battery health and safety equipment and training for 850 EV technicians.Through the third quarter of 2022, Manheim processed 144,000 EV and hybrid units, representing around 3% of the volume. There are already more than 700 chargers across 67 Manheim locations that serve the roughly 16,000 EVs on auction lots on any given day.
Originally posted on Vehicle Remarketing