Used Car Wholesale Auction Prices Are Going Down

If you’ve been paying attention to the used car market over the last couple of years, you definitely noticed that things were getting crazy. In many cases, used cars were in such high demand that they actually had higher price tags than brand new versions of the same vehicle. While it’s easy to focus on how the lack of new inventory and the high price of new vehicles impact drivers and shoppers, the soaring costs of vehicles also hurt car dealerships. Luckily, it looks like used car wholesale auction prices are going down, which could point to a return to some normalcy in the auto market.

Where Do Used Car Dealers Get Their Cars?

Have you ever wondered where car dealerships get their used cars? You might just assume that every pre-owned vehicle on the lot is simply a trade-in. While trade-ins make up a solid portion of used car collections, they don’t make up the entirety of a dealership’s stock. Dealers have been paying top dollar to buy cars or earn trade-ins from customers. In many cases, dealers were willing to pay more just to have some inventory.

A sizeable portion of vehicles on a used car lot comes from wholesale auctions. While many dealers prefer getting their inventory from other sources, like from the manufacturer, attending these events is a great option when your selection is dwindling. Wholesale auctions allow dealers to find vehicles that aren’t available through sales events, trade-ins, etc. These are competitive events but tend to be profitable for dealers who go in with a plan.

Covid and Wholesale Auctions

The Covid-19 pandemic rocked the automotive world. From supply line delays to computer chip shortages, every part of the industry felt the burden of the global pandemic. With a high demand for vehicles and unpredictable market fluctuations, dealers stopped relying on wholesale auctions to fill spots on their lots. Instead, they looked for specific cars that they knew people wanted. No one wants to have a hard-to-sell car in stock.

When desirable cars did become available, every dealer in town wanted to get ahold of it. That means the price when up, and the overall profit went down. In some cases, dealerships made almost no money from flipping the card they picked up, but it was enough to help keep on the lights.

Used Car Wholesale Auction Prices Are Going Down

The great news is that used car  wholesale auctions have been going down. For several months in 2022, we’ve seen prices steadily trend down. There were some sudden rises here and there, but the end result is looking good.

Some people believe that the falling prices at wholesale auctions are a precursor to prices dropping across the board. This could be the first real sign that the automotive industry is returning to “normal,” whatever that means in the post-Covid world.

Hopefully, the lower prices at wholesale auctions mean car dealerships aren’t struggling as much as they were, and shoppers have easier times finding their appropriate rides. Whether or not this trend will continue will take some time to see, but all signs point to some balance returning to the market.