"Price erosion continued in May, with another month-over-month drop in the index bringing it 0.3 points below our January result," said Chris Frey, senior manager of economic and industry insights for Cox Automotive. "Taking a longer view, May’s year-over-year decline accelerated from April and March; however, the rate of decline might slow over the next several months as we encounter the lower prices seen at auction from May through November last year.
New and used car prices both surged after the pandemic hit the U.S. amid soaring demand and production woes. Frey warned would-be buyers not to become too optimistic about the possibility of substantial declines in pricing. "Two consecutive reads in either measure do not a trend make, as used retail inventory is still below last year, and that tends to keep buyers at the auction, supporting prices," he added.