The retail used-car market appears to have started 2023 on a high note for dealers.

In fact, analysis from Cox Automotive this week said dealers had better than anticipated used-car sales last month.

Based on same-store dealership data from its Dealertrack unit, the company estimates that used sales for dealers climbed 16% month-over-month in January and beat year-ago figures by 5%.

Relief in prices for consumers meant stronger sales for dealers, Cox said, but softer prices aren’t likely to last.

“The principal reason for improving used retail sales early in 2023 is the price decline in retail that was a product of last fall’s wholesale price declines,” Cox Automotive chief economist Jonathan Smoke said in comments provided by the company.

“Now dealers are restocking at higher prices, so the retail price trend will reverse soon. It will be tough to maintain positive sales momentum with higher prices, especially as rates keep rising,” Smoke said.

This follows what was a tough December.

Cox estimates there were 2.42 million overall used-car sales in the final month of 2022, compared to 2.59 million in November 2022 and 2.53 million in December 2021.  

Looking at used-car sales at dealerships, those came in at 1.28 million for December, down from 1.36 million in November and 1.32 million in December 2021.

Cox Automotive senior economist Charles Chesbrough said in a mid-January analysis: “The used-vehicle market faces a challenging year ahead as demand weakens and supply of nearly new vehicles is particularly constrained. However, the slight sales decline Cox Automotive forecasts for 2023 will be far better than what we saw in 2022.”