Dealers could benefit from adjusting their strategies when it comes to pricing and turning used cars, and they may need to turn to additional services to maintain profits.

These were some of suggested strategies in the latest Used Market Report from J.D. Power, which found that  “correction” is ongoing in the wholesale vehicle market, where prices have been historically high — and these prices are expected to continue falling with new cars becoming more plentiful and used-car demand slowing.

Citing its own data and the National Auto Auction Association, J.D. Power said in the report that wholesale vehicle prices in July averaged $14,847, which was down 2.8% from June and off 5.6% year-over-year.

Year-to-date, wholesale prices have fallen 8.7%.

“The wholesale used-vehicle market has been undergoing a correction as the new vehicle market continues improving,” J.D. Power analysts said in the report. “Increased availability of new vehicles has contributed to the decline, as consumers have more options, slightly reducing demand for used vehicles and subsequently adding pressure to elevated wholesale prices.”

This “gradual correction” and stabilization of prices will likely remain ongoing, with potential for the declines to slow, “but external factors like interest rates and overall economic health will continue to influence trends,” the company said.

Breaking it down by segment, mass-market segment prices averaged $14,114 in July, a 2.8% decline from June and a 5.6% drop from July 2023. Through seven months, mass-market wholesale prices have fallen 8.7%.

Meanwhile, premium segment prices came in at $19,134 for the month, down 2.7% from June and off 5.9% year-over-year. Premium prices are down 9.2% year-to-date.

“Improved inventories of new vehicles, particularly in the premium segment, are putting downward pressure on used vehicle prices,” J.D. Power said. “Rising interest rates and broader economic uncertainties are having a more pronounced impact on the premium segment, leading to larger price declines compared to mass-market vehicles.”

On the retail side of the used-car market, prices have been steadier than their “more volatile” wholesale counterparts, but economic conditions have started to push those prices down.

Retail used-car prices averaged $28,469 in July, compared to $14,847 for wholesale prices.

That $13,622 gap is down from $15,041 at the end of 2023, the J.D. Power data shows.

“The retail-wholesale price gap is decreasing, potentially signaling challenges ahead for dealers in maintaining profitability as the market adjusts to the new economic realities,” analysts said. “Dealers are facing the challenge of balancing inventory levels with consumer demand.

“With shrinking margins between wholesale and retail prices, dealers may need to adjust pricing strategies, focus on inventory turnover, and explore value-added services to maintain profitability.”