Understanding the Manheim Used Vehicle Value Index
The Manheim Used Vehicle Value Index keeps track of how much car dealerships pay for used cars and can help car buyers get a general idea of the prices to expect in their search.
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If you've begun searching for a used car and looking into prices, the Manheim Used Vehicle Value Index may have shown up in your research. Accordingly, you may be wondering if this is a helpful tool for buying or selling a used car. Here's a rundown of what the index is and how it can benefit you.
What Is the Manheim Used Vehicle Value Index?
This index measures the prices car dealerships pay for used cars at auctions. The prices are adjusted for seasonal factors but typically offer insight into what dealerships pay for the used cars they sell. Cox Automotive—the company behind Autotrader and Kelley Blue Book—publishes the index and updates the data on a monthly basis, while the organization's Manheim Market Report is updated nightly with the latest wholesale prices.
The index is calculated based on a mix of car types and different mileages. It does not include heavy trucks or motorcycles, but it does include 20 other vehicle classes. The index starts by eliminating outlier data where the price and mileage data fall outside of a certain range. Then, they calculate the mean average sales price by mileage and market class. Pricing data is adjusted based on mileage. Next, they adjust market class data based on past sales by market class over the previous 24 months. Finally, a seasonal adjustment is added to account for the changing mix and mileage that occurs over time. Factoring in these particular data points allows the index to give a more accurate representation of the used car market as a whole.
What Information Can You Gather From This Index?
Technically, the index shows the overall price trends of used cars bought by dealerships at auctions. As an index, it doesn't show the price of any individual vehicle. This means you can't use this tool to see how much a 2018 Honda Accord sold for at auctions on average. However, you can use an index to see the overall price trend of used vehicles. The company also tracks smaller portions of the used car market with separate indexes, allowing a more granular view of specific segments such as sedans, minivans, or trucks.
The Manheim Used Vehicle Index is not generally used for insurance purposes, as the pricing in this data is based on auction results rather than typical used vehicle sales prices under normal sales conditions. Since it provides pricing on what cars sell at auctions for, dealerships should find this data very helpful. The data can help dealerships buy trade-ins at prices below auction value to still make money even if they can't sell a car locally. It can also give dealerships an idea of what they should expect to pay for used cars at auctions.
Should You Care About or Use This Index?
As a consumer, you can gather some information by looking at the results of this index. It gives you insight into the pricing trends of the used cars dealerships buy, but it doesn't give you a price you can expect to pay for a specific vehicle at a used dealership. That said, it may give you an idea of the relative price trends to expect if you plan to trade in a car at a dealership.
Unlike many vehicle valuation tools, to look up prices of specific cars using Manheim's data you must subscribe to their service. That means, unless you go through the time and expense of signing up, you can't easily compare Manheim pricing data to information from an online car valuation tool to give you an idea of how much you may want to pay for a used car.
Latest Trends From the Manheim Used Vehicle Value Index
As of March 2022, the
As of March 2022, prices decreased 3.3% from February 2022's reading. Still, used car prices are 24.8% higher than in March 2021. As of March 2022, it's still historically one of the most expensive times to buy a used car, except for the first couple of months of 2022.
Final Thoughts
The Manheim Used Vehicle Index is primarily published for car dealerships to use. If you're looking to purchase a used car today, the index can give you an idea of current pricing trends for what dealerships pay for used cars at auctions. However, it won't help you put together an offer based on market data of used car sales transactions at the consumer level. Instead, you may want to look toward online valuation tools that can point toward general estimates.
