Used Car Prices Finally Returning To Normal After Record Highs

Following record increases in 2021 during the pandemic, prices of used vehicles are expected to drop closer to normal levels this year following a particularly steep decline in 2022. In fact, the year-end Manheim Used Vehicle Value Index (MUVVI) of 219.3 represented a 14.9% year-over-year drop in 2022, the largest decline in the series' history.

Supply issues severely affected the availability of new cars during the pandemic's peak, pushing up demand for used vehicles. In July 2021, for instance, we reported that used cars and trucks were over 45% more expensive than a year before. Popular used models like the Ford F-150 and Chevrolet Tahoe were among the vehicles with ballooning prices. Fortunately, these three or so volatile years are now seeing some return to normality.

"It's undeniable that 2022 culminates with unprecedented declines in the MUVVI, but it's important to look at the bigger picture," said Cox Automotive Chief Economist, Jonathan Smoke. "These last three years have been extremely volatile for the market, and these declines follow record increases. In December 2021, we were up 47% year over year."

Smoke said that the pre-pandemic levels will probably never return and that all signs point towards equilibrium being established in the used market in the second half of 2023.

According to the Manheim Market Report (MMR), December 2022 also saw declines that were larger than normal. The MMR is a valuation tool that both consignors and dealers use when evaluating millions of trade-ins on a monthly basis, and it saw a 2.2% drop in the Three-Year-Old Index over the last four weeks.