Auto research firm Cox Automotive - the owner of the closely followed Manheim price index - published new data for the first 15 days of August that shows wholesale used-vehicle prices marginally increased—an ominous sign of sticky inflation.
The mid-month Manheim Used Vehicle Value Index increased by 0.1% from July in the first 15 days of August -- the first increase in four months. But when compared to the full month of August 2022, the index was down 7.8%.
Perhaps tight supply is driving re-inflation trend at the end of summer.
The report said buyers in the first 15 days of the resort had "more bargaining power for this time of year." All vehicles, including pickups, sports, cars, vans, and SUVs, slid 2.9%, 4.6%, 6.6%, and 7.5%, respectively, on a year-over-year basis in the first half of the month. Compact cars lost the most, down 13.5%, followed by midsize cars, down 11.9%, and luxury, declining by 8.8%
The monthly price uptick could be attributed to a tight used car market. Manheim explains:
Used retail supply measured in days' supply and compared to 2019 suggests supply is tighter than normal for this time of year. Wholesale supply has decreased with stronger wholesale purchase activity in early August and is tighter than normal for this time of year.
New and used car markets are still tight. However, interest rates notably influence vehicle demand, and the average consumer has diminishing disposable income and dwindling personal savings.
The first monthly positive print in four months comes as the latest Fed minutes warn: "Most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy."
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