Used vehicle wholesale values fell sharply in the third quarter, forcing Cox Automotive to dramatically revise its year-end forecast — from a 2% gain to just 0.2% — as rising interest rates and fuel costs conspire to push depreciation well beyond seasonal expectations.

The Cox/Manheim Used Vehicle Value Index declined to 205.9 in September, down 0.6% year over year and 1.1% from August on an adjusted basis, capping a quarter in which depreciation accelerated more steeply than the market typically sees in the fall. Non-adjusted wholesale prices fell 1.2% year over year and 1.3% from August.

“We are in the weakest season for wholesale valuations, and as September closed, depreciation was steeper than we typically see this time of year,” writes Jeremy Robb, chief economist at Cox Automotive. “With the conflict in the Middle East ongoing, diesel prices at record highs, and interest rates climbing rapidly, increasingly worrying both businesses and consumers, wholesale prices have felt the sting.”

Large pickups and SUVs absorbed the sharpest losses as fuel costs weighed on demand, while EVs and fuel-efficient vehicles bucked the trend. Wholesale EV sales at Manheim rose 45% year over year in Q3, reaching a record 4.9% of all Manheim transactions, as high gasoline prices supported demand.

Entering Q4, Cox analysts are monitoring rising interest rates, declining consumer sentiment and the conflict overseas. “We’re entering Q4 with our antennas up,” Robb says. “Many of the metrics we routinely track are converging back toward pre-pandemic norms, but the road to get there has been anything but smooth.”

Read the full report at Cox Automotive