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The Unprecedented Rise in Used Vehicle Prices
In a notable shift, wholesale used-vehicle prices have climbed by 1.6% in the first half of November 2024, as reported by the Manheim Used Vehicle Value Index. The index increased to 206.1, showing a 0.5% rise from November 2023. Despite typical depreciation during this period, December's early figures reveal a robust market with minimal year-over-year price declines at just 0.6%.
Understanding the Market Dynamics
Industry analysis from Cox Automotive highlights a dwindling supply in both wholesale and retail markets, paving the way for increased prices. Jeremy Robb, Cox's senior director of economic insights, noted a consistent surge in sales conversion rates for six consecutive weeks, which correlates with this price increase.
Historical Context and Background
Traditionally, November experiences slight declines in market values; however, this year's trend defies historical patterns. Typically, the Manheim Market Report indicates an average 1.0% decline during this period for their Three-Year-Old Index, but current data reflect only a 0.3% drop, showcasing a tightly bound market with prices aligning closely to current Manheim Market Retention values.
Future Predictions and Trends
As the used vehicle market continues to defy seasonal trends, dealership owners should be prepared for a continued tightening in supply, potentially driving further price escalations. Understanding these shifts is crucial for dealership owners and GMs, as it prepares them to navigate emerging opportunities and challenges effectively.
Actionable Insights and Practical Tips
Dealers can leverage this uptick by focusing on enhancing their procurement strategies to offset the narrowing supply. Implementing robust sales training tailored to these dynamics can ensure that sales staff are equipped to capitalize on the current market momentum, ultimately boosting profitability.
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