Wholesale used car prices saw their largest decline in June since the start of the Covid-19 pandemic, according to Cox Automotive.

The Manheim Used Vehicle Value Index, which tracks vehicles sold at wholesale dealership auctions, dropped by 4.2% from May to June, reaching 215.1.

This marks the third consecutive monthly decline and one of the index's largest drops on record.

The decline in prices is expected to stabilize in the second half of the year, with less volatility in wholesale price movements. Chris Frey, Cox’s senior manager of economic and industry insights, stated that the improved availability of used retail inventory and reduced buyer activity at auctions contributed to the decline.

Although wholesale prices remain elevated compared to historical levels, they are down 10.3% compared to June 2022. This decline may eventually lead to lower prices for consumers in the coming months, as retail prices typically follow changes in wholesale prices.

Despite the decline in wholesale prices, the retail used car market remains strong. However, it was estimated to be down 6% in June compared to the same period last year. This decline can be attributed to increased availability of new vehicles and higher interest rates.

Used car prices have remained high since the early days of the pandemic due to a combination of the global health crisis and supply chain disruptions. The low supply of new vehicles led consumers to turn to the used car market, driving up prices. However, Cox predicts that wholesale used car prices will be down around 1.1% by the end of this year compared to December 2022.

Cox expects a slow and gradual recovery in used car prices in the wholesale market, with prices potentially returning to pre-pandemic levels by 2028.