January/February Kontos Kommentary: Current Used Vehicle Market Conditions

Download PDF


Average wholesale prices have held fairly steady at the start of 2022, though they have softened modestly from peak levels achieved in early November 2021 and to date have not shown their typical Spring/Tax Season uptick. A key difference in current market conditions versus those in place during the November price peak is that rental companies have started to receive a greater allocation of new vehicles, which has diminished their need to purchase late-model used vehicles as a substitute.

Retail used vehicle sales and CPO sales have started the year down compared to 2021, 2020 and 2019, as consumers may be shying away from purchasing used vehicles at such historically high prices.


According to KAR Global Analytical Services’ monthly analysis of wholesale used vehicle prices by vehicle model class, wholesale prices in January averaged $16,363 – up 2.1% compared to December, up 30.4% relative to January 2021, and up 52.1% versus pre-pandemic/January 2019, as seen in the table below.

Wholesale prices in February averaged $16,236 — down 0.8% compared to January, up 22.6% relative to February 2021, and up 50.7% versus pre-pandemic/February 2019, as seen in the following table

Similar patterns can be seen when holding constant for sale type, model-year-age, mileage, and model class segment — using criteria that characterize off-lease units — for midsize cars and midsize SUV/CUVs, as seen in the following table:

Based on NADA data, retail used vehicle sales by franchised and independent dealers year-to-date through February were down 1.6% versus 2021, down 8.3% versus 2020 and down 3.9% compared to 2019.

On a year-to-date basis through February, CPO sales were down 12.9% versus 2021, down 21.5% versus 2020 and down 12.9% compared to 2019, using figures from Motor Intelligence.


This section is intended to provide unique insights into used vehicle market dynamics. In this edition, I’d like to examine the historical relationship between the used and new vehicle consumer price indexes, using figures from the U.S. Bureau of Labor Statistics. The graph below shows the ratio of the used vehicle CPI to the new vehicle CPI going back to January 1990.

Notice that the ratio normally hovers between 0.90 and 1.10, with an average of about 1.00. This makes sense, since used vehicle price increases are generally limited to the growth rate in new vehicle prices; ultimately, new vehicle prices represent a ceiling on used vehicle prices because new and used vehicles are substitute goods. However, since the pandemic, the ratio has jumped to over 1.20 and stood at 1.26 in February. This situation is likely the result of the chip shortage and other supply chain bottlenecks that have limited new vehicle availability as a substitute for high-priced used vehicles. As supply normalizes, used vehicle price growth should return closer to its typical one-to-one relationship with new. This price normalization will likely be gradual, as it will take some time for both new and used vehicle supply to recover.

Source: Analysis is based on over seven million annual sales transactions from over 250 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. KAR Global Analytical Services segregates these transactions to study trends by vehicle model class, sale type, model year, etc.

Disclaimer: The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to KAR Global. The views and analysis are not the views of KAR Global, its management or its subsidiaries; and their accuracy is not warranted.

Forward-Looking Statements: The statements contained in this report and statements that the company may make orally in connection with this report that are not historical facts (including, but not limited to, expectations, estimates, assumptions and projections regarding the industry and business) may be forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “promises”, “likely to” and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the company’s Securities and Exchange Commission filings. The company does not undertake any obligation to update any forward-looking statements.

Related Content