Cox Cuts 2024 Used-Vehicle Price Forecast to 0.2% Gain

Cox Automotive on Wednesday cut its 2024 forecast for the Manheim Used Vehicle Value Index to a 0.2% gain, down from a prior 2% projection, as gasoline at record highs and climbing interest rates squeeze American buyers.

The Atlanta-based auto services firm said the Manheim index fell 0.6% in September — the first month since early 2023 in which the gauge sat below its year-earlier level. The historical average for the index runs about a 2.3% annual gain, underscoring how far the wholesale market has drifted from its post-pandemic highs.

The September print marked the first sub-year-ago reading in roughly 18 months, a turning point for an index that surged more than 50% between 2020 and 2022 as chip shortages throttled new-vehicle production.

What drove the downgrade?

Three forces converged in the third quarter, according to Cox's chief economist, Jeremy Robb. High diesel prices, persistent Middle East conflict and rising borrowing costs pushed wholesale depreciation into a higher gear.

"The first half of the year actually showed more appreciation than usual, even in the face of higher fuel prices. But with the conflict in the Middle East ongoing, diesel prices at record highs, and interest rates climbing rapidly, increasingly worrying both businesses and consumers, wholesale prices have felt the sting," Robb said in a statement.

Non-adjusted wholesale used-vehicle prices fell 1.2% year over year in September and dropped 1.3% from August, Cox reported. Depreciation accelerated through the third quarter, reversing the unusual appreciation seen in the first six months.

Which vehicles are winning and losing?

Fuel-efficient cars and electric vehicles gained value during the quarter, Cox said. Large trucks and SUVs — the segment that dominated dealer lots during the pandemic-era price run-up — performed poorly.

The split tracks gasoline at the pump. The national average reached $4.33 per gallon in September, 50 cents above the prior September record of $3.83 set in 2023, according to AAA.

Cox also flagged continued growth in EV sales and off-lease volume, two structural shifts reshaping the wholesale market. As more battery-powered models return from lease, the supply of late-model EVs on dealer lots is set to climb further.

What does the ceiling mean for dealers?

Retail demand for used vehicles remains "relatively healthy," Cox said, yet pricing signals suggest dealers have hit the upper limit of what shoppers will pay.

The average listed price of a used vehicle stood at $27,239 as of August, per Cox data. New vehicles carried an average sticker of more than $50,000, a gap that keeps most U.S. buyers in the used market. Cox noted that the majority of U.S. consumers purchase used vehicles because they are more affordable than new models.

What's the outlook?

Cox now projects the Manheim index will end 2024 essentially flat, a sharp reversal from the 0.4% gain recorded last year after the pandemic-era run-up. Any sustained move lower would mark the weakest annual reading since the early-pandemic period.

Retail prices traditionally follow wholesale moves with a lag. If the forecast holds, shoppers could see lower asking prices through year-end, even as dealers absorb the squeeze on margins. For Cox's clients — including auto lenders, fleet operators and the nation's largest dealership groups — the September data raises fresh questions about year-end inventory strategy and floorplan financing costs.