Used-car prices continued their upward drift in June, with electric vehicles (EVs) posting outsized gains, according to data from Cox Automotive. The Manheim Used Vehicle Value Index, a closely watched measure of wholesale auction prices, rose to 212.9 on a seasonally adjusted basis — up 2.1% from a year earlier and essentially flat from May.
Jonathan Gregory, a senior manager at Cox, described the market as having found “solid footing” after a first half that benefited from tax refund season. But the standout story was EVs: Cox’s dedicated EV index jumped 12% year over year, compared with just 1.7% for non-EVs. That divergence is notable because it suggests that demand for used electric vehicles is outpacing the broader market, even as new EV sales have faced headwinds from high interest rates and range anxiety.
Not All Segments Are Equal
The overall index masks some important variation beneath the surface. Compact cars have held up relatively well, while SUVs and pickup trucks are showing weaker pricing compared with last year. That pattern may reflect shifting consumer preferences as fuel prices moderate and household budgets remain stretched.
At the wholesale level, demand still looks reasonably healthy. Cox reported a sales conversion rate of 57.5% in June — above the three-year average for the month. That suggests auction buyers are still willing to pay up for vehicles, particularly EVs. But Gregory flagged two potential risks for the second half of the year: a sharp increase in off-lease vehicles hitting the auction lanes, especially EVs, and falling gasoline prices that could make gas-powered alternatives feel more affordable on a day-to-day basis.
What It Means for Your Wallet
For everyday investors and car buyers, the used-car market matters more than you might think. Leasing a vehicle is essentially a bet on its future resale value. When lenders set lease payments, they estimate a “residual value” — what the car will be worth at the end of the lease term. Strong used-car prices, like those seen for EVs in June, allow lenders to set higher residuals, which lowers monthly payments because you’re financing less depreciation.
But that dynamic can reverse quickly if supply surges. Gregory warned of a steep ramp in off-lease returns in the second half, particularly for EVs. If more of these vehicles show up at auction and prices soften, lenders may lower their residual assumptions on new leases, pushing monthly payments higher. For people already in a lease, a buyout price set months ago can look less appealing if the market value drops, making the choice between buying the car or returning it feel very different.
Falling gasoline prices add another layer. When gas is cheap, the running-cost advantage of an EV narrows, potentially cooling demand for used electric models. That could put downward pressure on EV residuals and, by extension, on lease terms for new EVs.
Broader Market Context
The used-car market is also a useful lens on the broader economy. Wholesale inventory dynamics have been a topic of interest this year, with US wholesalers adding less inventory than first reported, and the stocks-to-sales ratio hitting a 12-year low. That tightness in supply chains has helped support used-car prices, but the coming wave of off-lease vehicles could change that picture.
Meanwhile, the energy backdrop is shifting. Natural gas prices have been under pressure, and EQT’s Q2 output is expected near the top of guidance despite lower prices. Cheaper energy generally means lower gasoline prices, which could further tilt the calculus for car buyers.
For investors, the key takeaway is that the used-car market — and especially the EV segment — is at a pivot point. Strong current pricing is a positive for auto lenders and leasing companies, but the risks ahead are real. Anyone considering a lease or a used-car purchase should keep an eye on auction trends and gasoline prices in the months ahead.
