Cox Automotive reported that its Manheim Used Vehicle Value Index, which tracks the auction prices of used cars, plunged 14.2% from a year ago. The index has also slid to the lowest point since August 2021 as used-car sales tumbled 10% in November. November's monthly decline on a year-over-year basis of 14.2% was the largest ever on Manheim's data.
A combination of new car supply and soaring borrowing rates have been the drivers of deflating the bubble. Cox chief economist Jonathan Smoke explained more: "New inventory is finally starting to build, and that's producing momentum in new retail sales, but that momentum appears to be at the expense of used retail. Especially it's the traditionally used car buyer that's most impacted by payment affordability." What happens next is that retail prices will start to decrease because of the high correlation to wholesale prices. The used car bubble has possibly, claimed the first victim: Carvana, whose stock imploded Wednesday after its creditors formed a pact as bankruptcy risks soar.