In this week, the used vehicle retailer Carvana saw its shares plummet by more than 40 percent in a single day. This steep drop came after a record year in 2021 with over $12.8 billion in revenue. Carvana’s descent is just one indication of the falling used car market.
The wholesale prices of used vehicles have reached their lowest level in more than a year. That means retailers like Carvana that purchased their inventory at record highs in the previous months are finding it difficult to sell at a profit.
Cox Automotive stated in their market report that the Manheim index has declined 15.6 percent this year. In November, the index dropped to 199.4, the first time below 200 since August 2021.
Consumers that may have purchased used vehicles in the shortage are now shopping for new cars. Recession fears are increasing, as well as interest rates. Simultaneously, new vehicle availability is rising. The semiconductor chip shortage that left dealer lots sparsely populated in previous months is improving. Cox reported that the average listing price of a used vehicle is down less than one-half of a percent from the beginning of the year.
