Manheim Used Car Value Index Bounces Back In March 2023

Value and collectability is often a consideration by car enthusiasts, even if decisions are driven by passion first. Even when you are not a dedicated collector, or investment guru, as car enthusiasts we’ve all tried to rebuy a car we owned as a teen or 20 something only to find out its more expensive now than when we owned it. In addition to purchase price or resale value, insurance costs and payments (in the event of a loss) are also highly dependent on used car values. Keeping up with enthusiast car valuation is certainly more difficult in the current inflationary environment.

Join us as each month we’ll be reviewing and discussing changing trends in car valuation.

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March 2023 Enthusiast Car Values

Index and Image Courtesy of Manheim/Cox Automotive

After a drop in the early part of 2023, driven largely by rising interest rates, macroeconomic uncertainty and a cooling economy, March saw a dramatic jump up. The index returned closer to where it was in late Jan/early Feb’s index. In fact, the index now is only about 10% off peak highs from end of 2022/beginning of 2023.

For car enthusiasts we’ve seen that manifest in a few ways:

  • While the highest peak pricing and dealer markups are easing a little, there still remains significant pricing pressure on the most desirable cars. Dealers are largely still selling slots, often with markups, on the most sought after cars.
  • Secondary cars are generally holding their value. Macroeconomic pressures are forcing more owners of desirable, but not highly sought after cars, to sell. Still, much like the housing market, there is such as a huge backlog of buyers that even with new supply and some buyers dropping out of the market, sellers still maintain a fair bit of leverage.
  • Project Cars – those that are at peak maintenance but bottom of desirability are experiencing a noticeable decline in pricing. Still, these prices remain well elevated over historic levels, there is a clear value opportunity developing.

Car enthusiasts should expect some minor easing, but still noticeable markups and wait times for the most desirable cars. They should expect to see less growth in prices for desirable 4+ year old cars. Finally , car enthusiasts should see some value appear with 10+ year old cars, particular those with high maintenance costs or demands.

Where We Think Trends Are Headed

While the rebound in March may be isolated, we still expect to see further resistance to used car price growth, at least significant growth like we’ve seen, at least until inflation and economic growth stabilize. With the backlog of new car production persisting, and car companies seem to he hesitant to dramatically increase production, expect no significant decline in overall prices.

We should also note many of the largest car companies are investing heavily in electric car production, which means highly desirable internal combustion enthusiast cars may have sustained production backlogs.

We believe any declines will likely be:

  • Slow compared to the overall ramp up in prices we’ve seen the last few years
  • Continue to be specific to individual cars/models/types of used cars rather than a broad based discounting
  • We do expect to continue to see further decline in the cars that are the most expensive to own, at least when there is limited immediate collector value. This presented a value opportunity for enthusiasts buyers.

We believe any increases will likely be:

  • Constrained until the macroeconomic and interest rate pressure ease. While some incremental overall growth may continue without a full pull back in the economy, we don’t see the trends continuing to be as aggressive as they.
  • We expect to continue to see price increases and pressure for the most desirable cars. Again, highly sought after ICE vehicles are likely not going to see production increases. This allows car companies to keep prices (margins) high while focusing on the pivots to eclectic vehicles.

Specific Enthusiast Car Valuations

If you are interested in learning more about what your car is worth, particularly if it’s an enthusiast car or unique, check out Shift Brokers guide to car valuation.

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