Used car prices rose in January, according to the Cox’s Manheim index.

A man buys used cars at a Toyota of Deerfield dealership in Deerfield Beach, Florida.

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DETROIT. Stronger-than-expected demand for used cars last month led to the biggest increase in wholesale prices since the end of 2021, according to new data from Cox Automotive.

Automotive information firm Manheim Used Car Value Index decreased by 12.8% in January compared to the inflation rate a year earlier, but rose by 2.5% compared to December. This was the biggest monthly gain since the 3.9% jump from October to November 2021.

The larger-than-expected increase in the index, which tracks the prices of used cars sold at wholesale auctions in the US, was partly the result of unseasonal strong demand, Cox said.

Used car prices are increasingly attracting investors and the Biden administration as a barometer for lowering inflation. Early last year, the administration blamed much of the country’s rising inflation on the used-car market.

The Manheim Used Car Value Index fell 15% last year as buyers refrain from buying used cars due to record high prices.

Cox reports that the average listing price for a used car in December was $27,143 (latest available data), down nearly 4% from a year earlier. Retail prices for consumers traditionally follow wholesale prices.

The research firm said last month that the used car market has stabilized, resembling its pre-pandemic normal levels, with inventories holding steady and prices falling from record highs. He forecast wholesale prices for the Manheim Used Car Value Index at the end of 2023 to be down 4.3% from December 2022.

Used car prices have risen since the start of the coronavirus pandemic as the global health crisis, combined with supply chain problems, has seen new car production idle at times. This has led to a low supply of new cars and record high prices amid strong demand. Prices and inventory shortages have encouraged consumers to buy used cars, which has also driven those prices up.

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