Used automobile prices post biggest drop ever as recent luxury automobile sales boom

The volatility within the used automobile market rolled on in 2022, but there is likely to be some relief for automobile buyers coming this 12 months.

The Manheim Used Vehicle Value Index (MUVVI) for the month of December posted a 0.8% increase in wholesale auto prices month over month, nonetheless it dropped a whopping 14.9% 12 months over 12 months, the most important annualized price decline ever within the 26-year history of the index.

That being said, December’s index rating of 219.3 remains to be much higher than pre-pandemic levels, when the 2019 average index rating got here in at 151.5.

The Manheim Used Vehicle Value Index (MUVVI) for the month of December

“It’s undeniable that 2022 culminates with unprecedented declines within the MUVVI, however it’s vital to take a look at the larger picture,” said Jonathan Smoke, Cox Automotive’s chief economist. “These last three years have been extremely volatile for the market, and these declines follow record increases. In December 2021, we were up 47% 12 months over 12 months. The pre-pandemic levels will likely never return, but all indicators point to reaching equilibrium within the second half of 2023.”

That equilibrium may very well be going down on the dealer level. Using Dealertrack data, Cox Automotive analysts found that same-store sales at used automobile dealerships fell 7% in December month over month and down 10% 12 months over 12 months, which is analogous to what Cox saw in November.

On the flipside, recent automobile sales proceed to rebound. Dealertrack Data shows recent light vehicle sales in December climbed 4.9% 12 months over 12 months, and by volume were up 12.2% from November.

Luxury sales boom

In truth, sticking to a trend seen earlier in 2022, recent automobile sales at the very best end of the market seem strongest of all. Germany’s BMW (BMW.DE) retained its title because the No. 1 brand in the worldwide premium market, besting its rival Mercedes-Benz. While each brands saw sales decline 12 months over 12 months because of shutdowns and the impact from the Russian war in Ukraine, they each saw strong sales increases in Q4, suggesting a return to normalcy and growth.

NEW YORK, NEW YORK - JULY 18: People walk by a Lamborghini car along Wall Street in the Financial District of Manhattan on July 18, 2022 in New York City. Global markets continue to be volatile as inflation in the United States hit a 40-year high while fuel prices have started to decline. Despite the uncertainty, consumers continue to spend as retail sales rose 1% between May and June.

NEW YORK, NEW YORK – JULY 18: People walk by a Lamborghini automobile along Wall Street within the Financial District of Manhattan on July 18, 2022 in Recent York City. Global markets proceed to be volatile as inflation in america hit a 40-year high while fuel prices have began to say no. Despite the uncertainty, consumers proceed to spend as retail sales rose 1% between May and June.

Stepping as much as the ultra-luxury end of the market, Lamborghini revealed it sold a record 9,233 cars in 2022, a jump of 10% from the prior 12 months. Asia and the Americas showed the largest gains when it comes to sales of growth for the Italian supercar brand. Sales were powered by its Urus “super SUV,” which topped 5,300 deliveries globally. Lamborghini CEO Stephan Winkelmann, who earlier this 12 months said luxury demand was insatiable, said the corporate needed to “fastidiously and meticulously manage” its future order intake to keep up a controlled level of growth and exclusivity.

Within the U.K., Lamborghini’s corporate cousin under the VW (VOW.DE) umbrella, Bentley, delivered a record 15,174 vehicles across all its sales territories, a jump of 4% versus 2021.

“In what was one other 12 months of unpredictability, the business overcame significant headwinds and demonstrated great resilience to deliver the third consecutive 12 months of record sales,” Bentley Chairman and CEO Adrian Hallmark said in an announcement.

Hallmark told Yahoo Finance earlier this 12 months that he had “never seen spending patterns” like this with the posh consumer.

A staff member cleans a window of a Bentayga SUV on the Bentley production line at their factory in Crewe, Britain, December 7, 2022. REUTERS/Phil Noble

A staff member cleans a window of a Bentayga SUV on the Bentley production line at their factory in Crewe, Britain, December 7, 2022. REUTERS/Phil Noble

Bentley’s big domestic rival, Rolls-Royce Motorcars, also reported a record 2022, topping the 6,000-vehicle delivery mark for the primary time.

“I feel much more vital than volume might be the value position we achieved worldwide,” said Torsten Müller-Ötvös, Rolls-Royce Motorcars’ CEO in an interview with Yahoo Finance. “On average, half one million [dollars] a Rolls-Royce goes now for, and that is sort of an achievement. That was 10 years ago on $250,000, so quite a considerable higher positioning of the brand.”

Wall Street is getting on board the high end luxury trade as well, with Bank of America adding Ferrari (RACE) to its best auto ideas list in 2023.

Bank of America analysts cited aspects akin to modest volume expansion, an upward bias on pricing, licensing opportunities, and a commitment to preserving the “exclusive luxury culture” (i.e., controlling production volumes) as “upside risks” for the stock going forward.

Pras Subramanian is a reporter for Yahoo Finance. You’ll be able to follow him on Twitter and on Instagram.

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