Car dealers paid less for used cars at auction in March than they did in February. Ordinarily, we’d tell you that means a drop in used car prices is coming soon.
But this month is not ordinary.
Used car prices have fallen slowly in recent months. We predict future used car prices by watching the wholesale price dealers pay to refill their lots. That figure, called the Manheim Used Vehicle Value Index, comes from car auction giant Manheim.
Cox Automotive owns both Manheim and Kelley Blue Book.
The index declined in March, which would signal a drop in retail prices in about six to eight weeks in a normal market.
Tariffs Start Prices on a Roller Coaster
According to Cox Automotive Chief Economist Jonathan Smoke, “I think we have officially started our roller coaster ride” triggered by tariffs on new cars and car parts. Used car sales had begun to slow in March – part of a regular pattern, Smoke says. “But then suddenly: The tariff announcement. And the most recent activity suggests we’re going to see a sizeable increase in the Index in April.”
Jeremy Robb, Cox Automotive senior director of Economic and Industry Insights, explains, “We saw a reacceleration of weekly gains for wholesale values in the last week.”
Retail used vehicle sales sped up in March, with Americans buying almost 20% more used cars than they did in February. New car sales also sped up, with volume nearly 30% higher than the month before. New car sales hit their fastest rate in four years.
As new car prices rise and selection dwindles, would-be new car buyers sometimes head to used car lots in search of something they can still afford.
“Given the impact of tariffs, we may see stronger wholesale prices for the coming weeks as the market decides how to handle new tariffs at the border,” Robb says.