All major market vehicle segments saw seasonally adjusted prices that remained lower year over year in the first half of July, according to the mid-month Manheim Used Vehicle Value Index released July 17.
Meanwhile, wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 1.8% from June in the first 15 days of July, the index showed, which increased to 199.7, down 5.7% from the full month of July 2023. The seasonal adjustment reduced the results for the month. The non-adjusted price change in the first half of July declined 0.4% compared to June, while the unadjusted price was down 6.8% year over year. The mid-month rise marked the first month-over-month increase in July since 2018, excluding the pandemic period.
Compared to the industry’s year-over-year decline of 5.7%, the major vehicle segments fell by the following percentages against July 2023:
SUV segment declined by 6%
Pickups fell by 6.1%
Midsize cars were down 6.6%, showing a bit more depreciation year over year.
Compacts fell by 7%
Luxury dippped the most, dropping 7.7%.
Electric vehicles (EVs) were down 12.1%, compared to 5.8% for the non-EV segments overall.
However, several major segments showed larger price increases compared to June against the index performance. The overall industry rose by 1.8% against the prior month. However, compact cars were up 2.7% compared to June, and midsize cars increased by 3.1%, higher than the index overall. Both the SUV and pickup segments increased by 1.8% against June 2024 and the luxury segment was flat over the same period. Compared to June, non-EVs increased 2.4% in the first half of July, while EVs were up 1.5% in the month.
“As we ended June, weekly depreciation trends at Manheim slowed markedly, and that has continued through the first half of July,” said Jeremy Robb, senior director of economic and industry insights at Cox Automotive. “Sales conversion has been increasing and is much higher than the last several years at this time, as more dealers are shopping for wholesale units to satisfy consumer demand for used vehicles, right when lease maturities are starting to decline.”
During the last two weeks, the Manheim Market Report (MMR) prices in the Three-Year-Old Index reversed course and increased an aggregate of 0.3%, which was above the typical normal decline of 0.5% observed at this time of year. Over the first 15 days of July, MMR Retention, the average difference in price relative to current MMR, averaged 99.3%, indicating that valuation models have moved closer to market prices early in July. MMR retention is up one and a half points compared to the prior year at the beginning of July, and it is stronger than the last few years at this time.
The average daily sales conversion rate of 58.8% in the first half of the month was below the July 2019 daily average of 60.1%, but it has improved in the last two weeks. The conversion rate rose two full points from June 2024, indicating that we are seeing stronger buying demand in recent weeks.
Wholesale Supply Is Up in Mid-July
Leveraging Manheim sales and inventory data, the estimated wholesale supply ended June at 26 days, flat from the end of May and against June 2023. Wholesale supply is relatively normal for this time of year, running virtually even to longer-term levels. As of July 15, wholesale supply increased by two days from the end of June, moving to 28 days, flat against year-over-year levels. It’s seasonally normal to see wholesale supply increase slightly over the July 4th holiday.
Rental Risk Prices Declined in the First Two Weeks of July
The average price for rental risk units sold at auction in the first 15 days of July was down 10% year over year. Rental risk prices declined slightly compared to June, falling by 0.6%. Average mileage for rental risk units in the first half of July (at 58,200 miles) was down 3.8% compared to a year ago and increased by 17.8% compared to June.
Measures of Consumer Sentiment Showing Mixed Trends in July
The initial July reading on consumer sentiment from the University of Michigan fell 3.2% to 66 when a slight gain had been expected. If that level holds, it will be the lowest level for sentiment since November and down 7.7% year over year. Views of current conditions and future expectations both declined, and expectations for inflation in one year and five years both declined. Consumers’ views of vehicle buying conditions were effectively unchanged, near the lowest level since November 2022. Consumers’ views of vehicle prices and interest rates remain very negative.
The daily index of consumer sentiment from Morning Consult shows a slight gain through mid-July. The index increased 0.6% in June and has increased a slight 0.1% in July as of July 15. Sentiment is down 0.6% year to date.
According to AAA, the average unleaded gas price has increased 0.7% month to date to $3.52 per gallon as of July 15. Gas prices are down 1% year over year but are up 13% year to date.
