While still up a double-digit percentage from a year ago, wholesale prices in July softened ever so slightly from June, marking the second straight month-over-month decrease.

And there could be some moderation — even a reversal — in the year-over-year price differences as the second half of the year continues, according to Cox Automotive.

The Manheim Used Vehicle Value Index for the month came in at 219.6 in July, which is down 0.1% month-over-month when adjusting for mix, mileage and seasonality, according to Cox. The index climbed 12.5% year-over-year on an adjusted basis.

Without the adjustments, the index fell 3.2% month-over-month and were up 10.2% from July 2021. And that year-over-year change was twice as high earlier this year, according to Cox.

And for more context, the index reading in July (219.6) was not only the lowest so far in 2022, it was lowest reading since September (204.8).

In a Smoke on Cars analysis from July 21, Cox Automotive chief economist Jonathan Smoke wrote, “At the wholesale level, data shows that values are clearly retreating from their record highs this past winter. In June, we reported that the unadjusted average wholesale price was up 10.7% year over year, just under half what it was at the end of March this year.

“We have been particularly focused on unadjusted prices, as the last two-plus years have created havoc with seasonal patterns,” he said. “I won’t get into the minutia of seasonal adjustment algorithms here, but let me just say that the market should be careful when considering seasonally adjusted metrics because of the very abnormal patterns we’ve seen since 2020.

“We expect the year-over-year wholesale value increases to come down more in the second half of the year and turn negative by November, as we lap the increases in the fall of 2021.”

A similar sentiment was shared in analysis around Black Book’s Used Vehicle Retention Index for July, which came in at 189.4 points.

That was up 17% from July 2021 and 65% higher than March 2020 pre-pandemic levels, but down 1.1% from June.

“Wholesale prices reversed the trend at the end of June for the 2-8-year-old vehicle segments that comprise of Black Book’s Retention Index,” Black Book chief data science officer Alex Yurchenko said in a news release. “High gas prices, inflationary pressure, and global events kept consumer confidence low. Even with the lack of adequate new inventory, used retail demand continued to soften which finally pushed wholesale prices down.

“During the last week of July, we saw all segments decreasing in value, including full-size vans (with some segments dropping by more than one percent per week),” Yurchenko said. “We expect the wholesale prices to accelerate their declines in August as consumers are staying away from large purchases.”

Weekly value changes

Looking at weekly Manheim Market Report values from last month, Cox said these showed larger-than-normal decreases in July, but that gap slowed during the month.

All told, there was a 2.7% net drop in the Three-Year-Old MMR index in the past four weeks, the company said.

The average daily MMR Retention (average difference in prices compared to current MMR) came in at 97.9%. In other words, market prices were softer than MMR, Cox explained.

“The average daily sales conversion rate declined to 47.2%, which was a typical seasonal pattern but was at a level below normal for the time of year,” Cox said in the report.

“For example, the sales conversion rate averaged 56.5% in July 2019,” the company added. “The lower conversion rate indicates that the month saw buyers with more bargaining power for this time of year.”