Here’s Your Latest Update On Used Car Values According To America’s Largest Wholesale Car Auction Network

Morning Dump Car Dealership On Western Ave

Used car wholesale values kept sliding through October, Carvana’s value is absolutely tanking, Europe’s expected to import a ton of Chinese-made cars. All this and more in today’s issue of The Morning Dump.

Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.

Used Car Wholesale Values Drop 10.6 Percent Year-Over-Year, Per Maheim

A Buy Here Pay Here Dealer used car wholesale values
Photo credit: “Used car dealer in Miami” by ryantxr is marked with CC BY 2.0.

Used car wholesale values continue to drop with the latest Manheim Index update showing decline through October, down 4.5 points from last month to sit at 200 flat — that’s down 10.6 percent from last October’s 223.7. In case you’re not a frequent reader of The Morning Dump, Manheim is a massive wholesale auction house that shifts more than five million cars a year, so it has a ton of data on wholesale car values. While wholesale trends don’t always directly correlate to retail trends, the Manheim Index is a useful leading indicator of where the car market is going.

While, for some, it’s good to hear that the Index is now sitting at 200 points flat, there are a few things to keep in mind. On the negative side, the last truly normal month before the fan hit the shit was February 2020, with the index clocking in at 143.5, so we still have a long way to go before things return to anything resembling “normal.” On the plus side, the index is down from peak January silliness of 236.3, so the slow return to no longer screaming is happening. In addition, pricing continues to fall behind what Manheim expects.

Over the month of October, daily MMR Retention, which is the average difference in price relative to current MMR, averaged 98.2%, meaning market prices were below MMR values.

MMR is basically Manheim’s version of Kelley Blue Book or NADA Guides – a way of valuing used cars. So what does all of this mean? Well, every dealer who bought used inventory at the top of the market and let it sit on the lot with high profit margins is likely not thrilled right now. Get ready for loads of write-downs heading into year-end.

Manheim Index October 2022 used car wholesale values
Photo credit: Cox Automotive/Manheim

Oh, and from where I’m standing, I’d think used car prices are only going to continue to drop as new car supply increases. Speaking of new car supply, Manheim has some lovely insights into the state of the market.

October’s total new-light-vehicle sales were up 9.6% year over year, with one less selling day than in October 2021. By volume, October new-vehicle sales were up 2.9% from September. The October sales pace, or seasonally adjusted annual rate (SAAR), came in at 14.9 million, a 12.7% increase from last year’s 13.2 million and up 9.8% from September’s 13.6 million pace.

Wow, a 14.9 million SAAR pace. After years of shortages and production cuts, don’t you just love to see it? What’s more, these sales aren’t just for retail customers. Approximately 2.1 million of those vehicles are expected to go into government fleets, corporate fleets, rental fleets, and the hands of other new fleet buyers. This is fairly critical when it comes to the supply of late-model used vehicles and Manheim’s already seeing ex-rental car values decline by four percent month-over-month and 5.2 percent year-over-year. In addition, average mileage on these “rental-risk” units is down 6.9 percent year-over-year. Nice.

If you don’t need to buy a car right away and are just looking to add to your fleet rather than replace an existing vehicle, I’d think it might be best to wait things out for another few months. We’re still quite a way from used car prices approaching pre-pandemic levels, so I’d hope for further declines in used car wholesale values over the next few quarters. However, if you need to buy a used car relatively soon and are looking at buying from a dealer, be sure to weigh reduced prices against interest rates. One good interest rate hike could effectively cancel out month-over-month price reductions, plus as used car values decline, so does the value of any car you’re trying to sell. Come to think of it, we have a whole podcast episode on this subject that you’ll probably want to check out.

Carvana Appears To Be Falling Fast

Carvana Vending Machine
Photo credit: Carvana

Speaking of used cars, Bloomberg reports that used car retailer Carvana is cratering in the marketplace, quickly losing value as reality continues to bite.

Shares of the auto retailer have sunk more than 53 percent in the two trading days since the company reported disappointing third-quarter results late on Thursday, bringing its once-lofty market capitalization down to about $1.4 billion from $2.6 billion before the earnings miss. That’s a far cry from the $60 billion valuation the firm commanded last year.

Between falling inventory values, interest rate hikes, and some apparently questionable business practices, I’m not terribly surprised to hear of Carvana’s valuation tanking. While the general state of the used car market means that fiscal year 2022 will be a rocky one for dealerships, Carvana certainly hasn’t helped its cause by making several states hate the company. If you want to learn more about Carvana’s dealer license suspensions and criminal charges, check out this excellent piece Mercedes Streeter did on the used car vending machine chain.

Bosch To Pay $25M Dieselgate Settlement

Bosch Chips
Photo credit: Bosch

Oh, you thought Dieselgate was over already? Nope. The emissions cheating saga continues as Reuters reports that Bosch has agreed to pay a $25M settlement over California’s own diesel emissions probe.

The settlement, which is subject to court approval, resolves allegations Bosch participated in misconduct by providing hardware, software, and software programming or calibration services to Volkswagen and Fiat Chrysler – now known as Stellantis – “when it knew or should have known that these auto manufacturers were violating environmental and consumer protection laws,” California Attorney General Rob Bonta said.

Bosch confirmed the settlement but said it “neither acknowledges the validity of the claims brought forward, nor does it concede any liability.”

Under the settlement, Bosch must disclose to California if it concludes a manufacturer will use or has used software to evade emissions rules.

Well, that last clause just made things more interesting. It could open up a can of worms for any automaker that’s used Bosch-supplied equipment to squeak through laboratory emissions testing. If I were a manufacturer who engaged in a bit of dodgy emissions certification, I’d be quaking in my boots right now.

Europe Expected To Import A Ton Of Chinese Cars

Polestar 2 White
Photo credit: Polestar

Despite some pleas for more protectionist vehicle trade policy, Automotive News Europe reports that the analysts at PwC expect 800,000 Chinese-built cars to be sold in Europe by 2025.

Of the potential 800,000 Chinese-built cars, about 330,000 would be from Western automakers such as Tesla, BMW and Renault Group, all of which currently export EVs to Europe from China, including the Tesla Model 3, the BMW iX3 and the Dacia Spring.

“Chinese [automakers] are now seeking to consolidate their foothold in Europe,” PwC said. “Compared to their previous market entries in the past decade, the playing field has now been significantly leveled.”

It’s true, Chinese brands finally seem to be making waves in Europe. MG is already gaining a foothold with affordable, sensible cars that seem positioned for the average person, while Polestar has benefited from affiliation with Volvo. Perhaps more interesting is that if this forecast comes true, Europe could go from being a net exporter of new cars to being a net importer of new cars in just three short years.

The Flush

Whelp, time to drop the lid on today’s edition of The Morning Dump. With used car prices continuing to slide, I bet we all have our eye on a specific make and model of car we want once depreciation sets in again. Perhaps you plan on picking up a cheap Nissan Leaf for around-town use, or maybe you want a gently-used Ford F-150 for towing but don’t want to pay through the nose for it. Whatever the case, I’d love to know what you really want to buy once all this craziness is over.

Lead photo credit: “Car Dealership on Western Ave” by David Hilowitz is licensed under CC BY 2.0.

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41 Responses

  1. Carvana is one out of a million examples of tech world deep frying money on a half baked idea. It would be funny if resources weren’t being set on fire every single day to make a small handful of people mega rich and feed their egos. Don’t get me wrong, I hate traditional dealerships as much as anyone but Carvana ain’t it either…also their interest rates were absurd even before the hikes. I have stellar credit and when I decided to noodle around on Carvana a year or so ago the rates they were quoting for me were like 7-12%. I can’t imagine what they’re giving less than optimal buyers…the whole thing is a scam.

    Oh baby, when it comes to depreciation do I have a plan. I love the BMW M550i. It’s huge, comfy, has a big old V8, and is apparently a sharp driving experience for what it is. But new they’re 80-100k cars. I can’t afford to go that route…but I see certified ones with reasonable mileage pop up in the 50s/low 60s all the time. For that price they’re one hell of a buy…granted I’d definitely only take that plunge on a certified one or maybe one from Carmax where I can use the Demuro method and extended warranty the hell out of it.

    But in a few years, when the newly refreshed ones are in that range? Oh baby…I’ll make a move and have the dad car to end all dad cars, and the wife will approve because it’s an all wheel drive boat with seating for 4 adults. NGL I just want a V8 sedan and the Charger is decidedly not my style and I’d like all wheel drive so the IS500 just doesn’t do it for me/they’re probably never depreciating.

    1. I don’t know how many times I have to repeat this to get people to actually understand it.

      Carvana is not some ‘hot new tech startup.’ They never were. They are literally Ugly Duckling, one of the most notorious BHPH dealers in the world. Same owners. Same management. Same staff. All Carvana ever was, was an attempt to use rebrand-away while taking their scam online.

      1. The two guys who ran Ugly Duckling/Drive Time are convicted felons. They were major players in the savings and loan scandal back in the day, literally one of the biggest frauds ever perpetrated in America.

        1. Yep, and that’s just the tip of the iceberg with how criminal the operation is and always has been.
          Drive Time was their first attempt to use rebrand-away(TM) to hide who they were. Right after they bought a subprime lender that specialized in buying installment contracts from other dealers. (UD/DT does sub-subprime.) Then they started an insurance arm, “Drake Insurance Agency,” which forcibly purchased insurance for tens of thousands of customers who already had insurance. At usurious rates.
          In fact, their primary business was extracting money from the most vulnerable to the point where they were referred to as a ‘bank masquerading as a used car lot.’

          And how bad are they? Well, they got an $8M fine from CFPB for illegal debt collection practices – which is absolutely unheard of. Scumbag downstream collectors get fined daily, but the loan originator can go ten times further legally. And that wasn’t far enough for these criminals.

          The complete list of organizations these felons are running or involved with is almost impossible to figure out, because they make extensive use of private ownership, Delaware corporation laws, shell corporations, rebrand-away(TM), and shuffling the deck to hide it. The short list includes ownership of DriveTime, Bridgecrest Acceptance, Carvana, GO Financial, SilverRock Group, and dozens of subsidiaries under those.

          Oh, and it should surprise no-one at all that patterns of blatant insider trading at Carvana are rampant. After all, they learned from experts.

    1. Yeah, I did similar last year. I was looking at 2 year old trucks with around 25,000 miles. The price was within $2000 of what I ended up paying for a new truck. Since I plan on keeping it for 9-10 years, that 2 extra years of use was certainly worth the $2,000. My cousin owns a used car dealer and he even told me to buy new.

    1. Because if auction prices are falling, that mean that the lots are seeing fewer and fewer people coming in and paying those prices. Some may have just decided that for a few thousand more, they can get a new car with a full warranty at a lower interest rate.

  2. For me is an around the house pickup (dump runs, home improvement/backup vehicle). I am not paying 15 to 20k for one that will not fail apart.

    Anything lower and you are looking at rotten frames, cabs, rockers, major issues, for 8 grand.

    If I can pick one up for around 10k that will not be a basket case, I would be happy. I even went to 2wd/v6/normal cab and you are looking over 10k. Those usually are sub 10k and would work for me.

  3. Timed my sell/buy pretty good before the market decline.
    Two weeks ago, I sold my 2021 Civic EX sedan while the prices were still strong. With just under 7,000 miles, I sold it for $27400. The KBB guaranteed offer was $25700.
    I’d bought it new 18 months ago using a 2016 Accord EXL trade in value of $19800. (37k miles)
    Current MSRP on a new 23 Civic is $ 27145. It’s a crazy market.

  4. Another ’68 Charger; preferably already restored and/or restomodded to some degree. While the one I had before did absolutely *nothing* well.. besides look good.. I find myself pining for one again. Maybe a post-fried-egg 911. I really could use a nicer house though.

  5. Honestly, it all depends on what vehicle you are looking for with respect to used car values. I sought a very recent model year Audi S5 Sportback, and was put off by pricing until last month. I was convinced that I would be better off purchasing new as the pricing on used 2022 models, which were relatively few and far between considering the equipment I wanted, was at or above the new stock. I noted a very significant drop in used prices a few weeks ago, searched around and found the car I now own. I purchased a 2022 S5 Premium Plus (please don’t get me going about the marketing geniuses who came up with the model variant nomenclature), S Sport package with adaptive suspension, Black Optic package, B&O sound system, Napa leather, every other available factory option, and pre-paid 50K mile service package. The car has 9K miles, and I feel I got a good deal at more than 10K under original MSRP considering many new cars go for at least MSRP + (except for a few like the VW Arteon which are discounted). I also got what I was looking for on my trade, a 2018 Golf R. I’m happy with my purchase at the end of October, and don’t feel I could have done much better by waiting, although I temper that with the fact that I was seeking a vehicle which is admittedly not in the high demand mainstream.

  6. Regarding used car values… I’m gonna guess that used car values will drop at least another 10%… but 20% is more likely.

    And if a recession hits and companies like Caravana have to dump their stock, then a 30% drop becomes likely.

  7. Boring I know, but we’ll be looking for a new minivan in the near future. The CX-5 just won’t be big enough for 2 kids and a medium sized dog. I’m hoping the new or slightly used car market can at least get closer to pre-pandemic prices by next summer, but I’m not optimistic.
    Hybrid seems like the way to go for something like this, but the two options right now are hard to find and have insane pricing.

  8. I’m still too fubar’d to really muddle through the other news.

    Beyond a quick “no fucking shit Ugly Duckling’s attempt to run the scam online is tanking.”

    Oh, and the collapse and federal seizure of FTX for wire fraud is going to be absolutely hilarious to watch.

    With used car prices continuing to slide, I bet we all have our eye on a specific make and model of car we want once depreciation sets in again. Perhaps you plan on picking up a cheap Nissan Leaf for around-town use, or maybe you want a gently-used Ford F-150 for towing but don’t want to pay through the nose for it.

    Since FCAtlantis has truly gone and fucked themselves (removing every engine but the shitty 3.6 from the WL in order to force customers to buy Wagoneer/Grand Wagoneer,) I’m watching the market on ’22 WL’s. Lots of 1-year buybacks for attempted dealer flips in the market, and they are all going to be eating a big pile of shit. Prices are already dropping a bit – $1-2k at a time. And ain’t nobody going to be dropping literal mortgage money ($65k+, over $1k/month) on these things. Not with the scale and breadth of profiteering, extraction, and rent-seeking going on.

  9. The problem with trading in a car when values are declining is that the dealer knows that and will only pay you based on what it’s going to be worth in a couple of months when they actually sell it, but you have to buy the replacement now.

    I went to see what Carvana’s PE ratio is because I’ve seen a few other tech companies whose stock cratered in the past few months but are still overpriced for what they make. Unfortunately, Carvana has no PE ratio because it has no E. They’re apparently losing money on a consistent basis, despite the insanity of the car market for the past couple of years. How do you lose money as a shady used car dealer? I don’t even understand.

    1. I’m guessing they’ve thrown a lot of money away on advertising and gimmicks like the vending machines. And I bet if you dig further you’ll find that executive compensation has been quite healthy.

  10. The vast majority of used cars I’d consider are over 50 years old. Of the more recently-manufactured used car offerings, I’d gladly take an Alfa Romeo 4C. I currently have other priorities though for that kind of money.

  11. I have seen a few stratospherically priced enthusiast cars drop down to nearly ok levels. I have a lease that is ending in August, and I was thinking about plunking down for a MT Supra, but if I can snag a low mileage Boxter or Cayman in that price range I may go that route.

  12. I need to get my son a car before next summer. Something dependable, safe, and good in the snow. I’m hoping used prices continue to drop before then. I think they will have to, since car loan rates are rising (though much slower than mortgage rates). Right now, I see no value in the used market for him, and I’d probably finance something new instead or pick him up a “cheap” lease using my employee or supplier discount. I normally would try to buy something 3 years old coming off a lease, but the used cars are too expensive to make that attractive right now.

    I also have a leased vehicle to replace in May. I’m sure not going to get a sub $400 lease rate with 0 down on a near-luxury 7 passenger SUV again, but luckily I don’t need something that big anymore now that 2 of 3 kids are out of the house. I’m hoping to go PHEV or EV for the replacement. Maybe a Mitsubishi Outlander PHEV or Bolt EUV.

    1. I just picked up a new AWD Trax for <$24 out the door. It was for my wife, but I'm really enjoying it. I was not expecting to like it so much, but it's just a good, simple car. Ten air bags, 5 star rating…likely to be my daughter's first car in a couple years. Looking forward to trying it out in the snow…it even has a real hand-brake in the right spot. The little 1.4 Turbo motor seems fine, normal six speed auto…no CVT. I wish it had a manual, but it's my wife's car and manual wasn't an option anyway. Feels light and nimble (3200 lbs), easy to maneuver and park, good visibility. I'm actually kind of sad that production is winding down on these, they seem well made.

      1. You poor sad person. May I ask.. what is your daily driver please? What could possibly be so bad that it has you describing a Trax as “good”? Blink twice if you’re under duress.

        I had a rental Trax a few months ago that was just a godawful car. Ugly, sluggish at best, boring to drive, chintzy in every way, not comfy at all, bad NVH.. I couldn’t find anything positive about it at whatsoever… but now that I’m looking at your list I agree that it was “simple”, had (10 I guess?) airbags, and had a hand brake. Visibility was ok. 5 star rating apparently (for crash safety I guess?) “Nimble” is a stretch. “Well made” is absolute lunacy.

        1. I’ll admit my daily drivers are not that interesting these days. I have a full size crew cab pickup for work and we have a 3-row crossover for the family hauler….but at this point in my life I really have nothing to prove. When I lived in Germany, I would get a new car every six months. I liked some better than others, but I ordered every one the way I wanted it. Some were better around town, some were better on the autobahn. I had fairly low expectation on the Trax and I’ve been pleasantly surprised. Sometimes its nice to park in a tight spot in crowded parking lot, sometimes its nice to maneuver around a parking deck without making 3 point turns. Sometimes its nice to take a 2-track in the woods without scraping trees on both sides. It’s OK to be small and simple, I have enough big and fancy. I’m not expecting anyone to gawk at it’s beauty if I park in front of a fancy restaurant, but at least I can fit in the parking spot no-one else could. If I asked you to find a car for <$24K, that you could actually get in this market…and it had to be a new 4-door with AWD with an automatic and a high-ish seating position….What are your real choices? Are any of them much better? I'm not sure if you've done much car shopping lately, but this is pretty much below the average price of used cars.

  13. I want gas to spike as car prices come back to reality so I can get a bargain on a semi-late-model Suburban or Yukon XL. I can tow my trailer when needed, sleep in the back 1-3x a year, and road trip comfortably.

    I should probably sell my sportsmobile now, though, while prices are still high.

  14. I for one am looking forward tot he TRX owners getting them repo’d so I can get one for maybe 40K before the remaining ones start to gain value after the end of the hellcat sinks in.

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