Used Vehicle Prices Continue to Keep Foot on the Brake

02/14/2023 CUToday

LAWRENCEVILLE, Ga.—Used vehicle values continued to slide in January as the used car market returns to more normal depreciation levels following an extended period of price gains, according to Black Book.

The company said depreciation will likely slow as Spring arrives.

Black Book Used Vehicle Retention Index for January decreased 1.0% (1.7 points) to 167.7 from December 2022, which is 14.9% below where it was at the same time in 2022 and 46.4% above March 2020, pre-pandemic.

“Wholesale prices for the two-six-year-old vehicle segments that comprise Black Book’s Used Vehicle Retention Index declined in January, but the rate of decline is slowing down,” said Alex Yurchenko, chief data science officer at Black Book. “We are starting to see hints of an upcoming, traditional spring market. With wholesale and used retail prices still elevated by more than 40% compared to pre-pandemic levels, dealers are turning towards older vehicles to prepare for tax season sales. Thus, we are seeing more strength in older vehicle segments. Additionally, we are observing increased volume and improved conversion rates at auctions as some concerns about the economy were reduced by recent economic news.”

How Values are Calculated

The Black Book Used Vehicle Retention Index is calculated using Black Book’s published Wholesale Average value on two- to six-year-old used vehicles, as percent of original typically equipped MSRP. It is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage, and condition. 

Click here to obtain a copy of the latest Index data.