Earlier this month, Cox Automotive released January 2023’s used car values as part of the car auction giant Manheim Used Vehicle Value Index. The numbers showed that the value of a used car is starting to go up again after falling dramatically in 2022.

With that and recent reports of higher sales at auctions, it’s not a big stretch to think that the price of used cars can also go up at dealerships in the next month or so.

But why is it happening now, and will prices continue increasing or go back down again? What does this mean for the rest of 2023?

The Fall of Demand – and Prices – for Used Vehicles in 2022

From late 2021 to early 2022, demand for used vehicles was at its lowest point – leading to price drops of as much as 15% in mid-to-late 2022.

New vehicles were also finally back to being manufactured on schedule for the first time since the pandemic began in early 2020, which helped decrease demand and prices for used cars.

It was a classic case of what goes up must come down – used vehicle prices had reached a point that many customers simply could not afford.

When the high-cost bubble finally burst, prices came down to more reasonable levels, experts began talking about a return to pre-pandemic sales figures, and everyone looked forward to 2023.

And 2023 is proving to look a little different than last year’s predictions made it out to be.

Changes in January 2023 Show a New Upward Trend

Wholesale used car prices went up by 2.5% from December 2022 to January 2023. While this still leaves prices below what they were at their highest in 2021, it definitely causes concern.

Where prices were predicted to continue going down in 2023, they’ve gone up. Why?

According to experts, this can be explained by one very simple marketing concept: supply and demand. When the supply of used cars stays the same but demand for them goes up, prices increase.

That can easily explain the slight jump in wholesale prices.

But that still leaves a few questions for car buyers. Does that mean we shouldn’t be worried about the increase? Will prices continue to go up, or will they drop back down?

Do customers need to settle in for another year of being unable to buy a used car because the upfront cost is too much and interest rates are too high?

What This Means for Used Cars in the Rest of 2023

The truth is, there’s really no way to know just yet. There’s only one month of data for 2023, and the used car market is still very unstable.

All we know right now is that there’s been an increase in the value of used cars, which implies the beginning of a new trend to watch out for.

Keep an eye out for more news about the used car market in the next month or so to see if the trend takes hold or if prices dip back down!