Used car prices hit historic highs as new car prices rise 42%

February sees the sharpest rise in used car prices in 14 years as the economy continues to struggle with historic inflation.

Used car wholesale prices rose 4.1 percent from January to February 15, the biggest increase in February since 2009, according to Cox Automotive’s Manheim Used Car Value Index released mid-month.

It comes just a month after markets were hit by a surge in used car prices, according to the Manheim Used Car Value Index.

The used car index rose to 234.0, down 7.3% from all of February 2022, as seasonally adjustment led to a small portion of the gain.

Used car prices have long been used by US market watchers and the Fed as the primary benchmark for monitoring inflation rates. Prices, economists and auto insiders say, are driven by skyrocketing new car prices, which is forcing the public to refrain from buying new cars. Average new car prices in September 2022 are up 42.5% from February 2020, according to JPMorgan.

One of the problems associated with the controversial anti-inflationary policy of the Fed was a jump in wholesale prices for used cars.

While the latest Consumer Price Index (CPI) report showed a slight decline in used car prices, analysts say the category is expected to rebound significantly over the next few months due to time lag.

At the same time, the real-time Manheim index shows that future CPI data for the Used Cars and Trucks component is likely to increase as prices lead by two months.

Auto loan defaults are expected to start soon across the country

Used car prices are on the rise as consumer auto loans hit a new record of over $1.4 trillion, though many borrowers are beginning to doubt their loans.

The number of consumers in auto loan debt is on the rise, while car loan interest rates are at one of the highest levels on record.

The auto loan crisis could yet escalate into a major storm as the level of seriously delinquent loans reached levels not seen since the Great Recession.

There are fears that many people who bought cars during a time of low interest rates and $1,000 monthly government donations during the pandemic era will face financial ruin in the current “no recession.”

“People do not pay loans to buy a car. Overdue (overdue) car loans for more than 60 days increased by 26.7% compared to last year. It’s not a crisis yet, but keep a close eye on this trend,” industry columnist CarDealershipGuy said in his review. tweet last month.

– Telegraph services