Q2 used-vehicle values buck seasonal trends

Used-vehicle values continue to trend above pre-pandemic levels amid higher-than-normal wholesale price increases driven in part by a pull forward in purchases amid tariffs. Two years after global health agencies called an end to the emergency status for the pandemic, used-vehicle prices are still reflecting its industrywide impact, Paul Fortin , head of automotive products and co-founder at Exponential Markets , told Auto Finance News . From pre-pandemic late 2019 to peak levels around May 2022, values rose about 68.7%, he said. Used index up 4.8% YoY Exponential Markets’ used and electric vehicle value indices measure the wholesale price of all used vehicles and, separately, used EVs in operation and inventory awaiting sale. The Exponential Used Vehicle Value Index landed at 142.57 as of July 3, up 4.8% year over year but down 1% month over month. The index was down about 16.8% from the pandemic-era peak as of July 3 but would need to fall another 30.8% to reach pre-pandemic levels, not adjusted for inflation, according to an Exponential Markets analysis of the index. Exponential Used Vehicle Index [caption id="attachment_58353166" align="aligncenter" width="1024"] (Courtesy/Big Wheels | Source/Exponential Markets)[/caption] Values ticked up 0.3% at the end of Q2 compared with the end of Q1, Fortin said. By comparison, values during Q2 2024 fell 4% and declined 2% during Q2 2023. “On a quarterly basis, the composite market was choppy,” he said. “Q2 is a seasonally underperforming quarter, so the fact that it was flat means prices were supported.” Prices also rose about 6% during the first quarter, which is higher than usual, and brought the overall market increase to about 6.3% during the first half of the year, Fortin said. “That’s super strong,” he said. Part of the increase is due to consumers purchasing vehicles ahead of anticipated price increases due to tariffs on imported vehicles, with nine out of 10 vehicles with the strongest price performance in Q2 being import brands. “That’s not normal,” Fortin said. “It’s a pull ahead of demand with individuals trying to get ahead of tariffs that [are] concerned that new vehicles are going to go up ... [and] therefore used vehicles are going to be pulled up also.” Luxury vehicles lead market On a segment basis, luxury vehicles saw the highest rise in prices during Q2 with entry-level luxury vehicle values up 4% compared with the end of Q1 and values up across all luxury segments, according to Exponential Markets data provided to AFN . “The luxury segment is very strong and is outperforming the market." -- Paul Fortin, Exponential Markets “The luxury segment is very strong and is outperforming the market,” Fortin said. “That’s not normal; it’s usually a mixed bag.” Values by vehicle segment [caption id="attachment_58353168" align="aligncenter" width="386"] (Courtesy/Exponential Markets)[/caption] Full-size vans performed the worst, with values down 6.1% in Q2, followed by sub-compact cars down 4.5%; mid-size cars down 2.7%; and compact cars down 2.1%. Values on commercial vans shot up more than 100% during the pandemic and are now declining at a steeper rate than other segments, Fortin said. Model year analysis Newer vehicles also fared better from a price-performance perspective during Q2, bucking normal trends, Fortin said. “The seven most recent model years are the seven highest-performing model years,” he said, noting lower off-lease supply keeps prices higher as consumer demand shifts towards newer vehicles. Used-vehicle values rose the most for 2022 model vehicles in Q2 at 3.1%, followed by 2023 models at 2.8%, according to Exponential Markets data. Values by model year [caption id="attachment_58353167" align="aligncenter" width="361"] (Courtesy/Exponential Markets)[/caption] EV index rises 8.4% YoY Used-EV values also rose during the quarter as uncertainty around the federal EV tax credits loomed, with the tax credits now set to end Sept. 30. The Exponential Used Electric Vehicle Index rose 8.4% YoY but inched down 1% MoM to 93.07 as of July 3. During the pandemic, the index rose 58.2%, peaking at about 155 in July 2022. Exponential Used Electric Vehicle Index [caption id="attachment_58353165" align="aligncenter" width="1024"] (Courtesy/Big Wheels | Source/Exponential Markets)[/caption] Through July 3, the index has fallen 66.7% from that peak level and remains about 5% lower than pre-pandemic levels, without adjusting for inflation. EV values ended up 2.3% during Q2 from the end of Q1, which followed a 1% increase during Q1, bringing the year-to-date increase to 3.3%, Fortin said. The removal of federal EV tax credits is expected to affect used-EV price performance after September, he said. Big Wheels Data Tip: Use the zoom function at the bottom of the indices to take a closer look at how values trended during specific years. 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Q2 used-vehicle values buck seasonal trends

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