CARY, N.C. -

Some good news-bad news for dealerships’ used-car operations.

Sales are somewhat soft, but supply is improving — in fact, days' supply of unsold retail used vehicles is at its highest level in more than a year, according to Cox Automotive.

Cox Automotive estimated there was a 1% year-over-year drop in total used-vehicle sales last month. The sales figure was also down 1% from January 2020.

The seasonally adjusted annualized rate for used sales was 39.0 million last month, Cox said. In December, it was 36.2 million and in January 2021, it was 39.3 million.

Likewise, certified pre-owned vehicles sales were down close to 17% year-over-year in January and were at their lowest level since April 2020, during the initial onset of the COVID-19 pandemic, Cox said. Specifically, Cox’s analysis of Motor Intelligence data indicates there were 166,309 CPO sales last month. That’s down from 186,748 certified sales in December and 181,079 in November.

But, this slower overall used-car sales environment in used has allowed supply to begin recovering, though.

According to Cox’s analysis of vAuto Available Inventory data, there were 2.55 million unsold used vehicles on dealership lots at the end of January.

That’s up roughly 1% year-over-year, and beats the 2.38 million used cars on dealer lots at the end of December.

Looking at the data in a different way, there was 56 days’ supply of unsold used cars at the end of last month. At the end of 2021, there was 51.

What’s more, days’ supply is now up 26% year-over-year.

“Days’ supply began dropping last January, bottoming out at 30 in April and inching its way higher ever since,” Cox said in its analysis.

Supply is returning “to more normal levels,” given slower sales to start the year.

“Used vehicles are starting to see some inventory build-up ahead of the prime selling season as tax refunds come in,” Cox Automotive senior economist Charlie Chesbrough said in the analysis.

“The inventory volume and days’ supply are both above last year, though sales remain low,” he said. “Spring should see strong demand.”

Problem is, listing prices remain elevated. The average used-car listing price was $27,633 at the end of last month, Cox said, as the market has dipped “below peak levels.”

However, that price is up 29% year-over-year.

“The average used-vehicle price is still high even though it is down from recent peaks and should fall slightly in the coming weeks as it normally does after the holidays,” Cox said.

Prices on the wholesale side have already started to do so.

The mid-month reading of the Manheim Used Vehicle Value Index shows a 1.5% decline (on a mix-, mileage- and seasonally adjusted basis) in wholesale prices for the first half of February when weighed against the entire month of January.

Unadjusted, prices were down 1.4% month-over-month.

However, wholesale prices remain well-above year-ago levels, as they’re up 37.6% year-over-year on an adjusted basis and 33.5% unadjusted, Cox said.