Inflation Alert! Cox Automotive: Wholesale Used-Vehicle Prices Increase in January. 'In January, Manheim Market Report (MMR) values saw price increases that were not typical.'
Remember, falling used vehicle retail prices exerted big downward pressure on “core CPI”. This must make JPow nervous...
Source: https://www.coxautoinc.com/market-insights/january-2023-muvvi/
Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) increased 2.5% in January compared to December.
I want to call out the highlighted section:
The average daily sales conversion rate increased to 59.4% and was above normal for the time of year. For context, the daily sales conversion rate averaged 57.7% in January 2019. The higher conversion rate indicated that the month saw sellers with more pricing power than what is typically seen for this time of year.
Demand is higher at higher price points than would be expected for this time of year. They are also quick to call out that price change year-over-year is down (which is true):
HOWEVER, please notice how prices never retreated all the way back to 2020 numbers, but rather reversed and are now trending upward:
blue line=Seasonally Adjusted, Red line=Not Seasonally Adjusted
Adding, supply is turning over faster, (January ended at 44 days’ supply, down from 56 days at the end of December and six days lower than how January 2022 ended at 50 days) AND consumers confidence does not appear shook!:
So, consumers feel that now is a great time to buy even though prices are still elevated?!!?
This guy is looking worried again...
TLDRS: Falling used vehicle retail prices exerted big downward pressure on “core CPI” & “core PCE price index,” (the Fed's barometer for measuring inflation). The downward pressure from wholesales is letting up and possibly reversing. This must make JPow nervous.
