A pedestrian walks previous the sale of a licensed pre-owned automobile within the Alhambra, California, January 12, 2022.

Frederick J. Brown | AFP | Getty Photographs

Wholesale costs for used autos fell in January to February, an indication that whereas costs are close to file ranges, the bounce again in US used-car costs could also be short-lived.

Cox Automotive stated on Monday that its Mannheim Used Automobile Worth Index, which tracks the costs of used autos offered at Mannheim’s US wholesale public sale, fell 2.1% in February from January.

But, on common, used autos have traditionally been costly. The index is down from its file excessive in January, however is up 36.7% from the year-ago interval.

Provide chain disruptions associated to Covid – particularly, a world scarcity of semiconductor chips utilized in vehicles, vehicles and SUVs – have pressured automakers to restrict manufacturing of their new autos. In flip, demand and costs for a used automobile have elevated over the previous yr.

Whereas virtually all older autos are dearer than a yr in the past, the rise doesn’t have an effect on all classes equally. Knowledge from Cox exhibits that whereas costs of compact vehicles and vans rose 44.9% and 48.4%, respectively, in February year-on-year, costs for used pickups rose solely 24.8%.

The discrepancy between vehicles and compact vehicles displays the place of the brand new autos stock. Automakers, together with Ford Motor, Normal Motors and Chrysler father or mother Stelantis, have prioritized manufacturing of their extremely worthwhile (and heavy-selling) pickup vehicles over low-end compact fashions amid chip shortages. Which means customers hoping to purchase a brand new compact automobile or SUV usually tend to be out of luck, and extra prone to look for the same mannequin on the used market than patrons who purchase a brand new truck. Is.

However pickup-truck manufacturing additionally hasn’t been secure from disruptions. All three of Detroit’s huge automakers have needed to reduce manufacturing of vehicles a number of instances over the previous yr. And it isn’t over: Ford confirmed final week {that a} semiconductor scarcity has pressured it to chop manufacturing of its Tremendous Obligation pickups and bigger SUVs as soon as once more.

Efforts are underway to spice up manufacturing of the chips within the US and world wide. Chipmakers, together with Intel and TSMC, started constructing new semiconductor crops within the US final yr.

Nonetheless, some automakers usually are not ready for these factories to be up and operating. Ford stated in November that it might companion with chip provider GlobalFoundries to increase the attain of its product. And Normal Motors has begun working with a number of chipmakers on new designs that may tremendously scale back the necessity for the product in future autos.

Automotive semiconductor provides ought to start to enhance later within the yr as new factories start working, which is anticipated to have a knock-on impact in driving demand for used autos and decreasing costs.

In an in depth group, nevertheless, Russia’s invasion of Ukraine might exacerbate Chip’s shortcoming. Nations are necessary suppliers of neon fuel and palladium, two commodities vital to chip manufacturing.



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