The cost of used cars remains high, but there are signs that it may be decreasing.

• Used-car prices decreased by 2.1% in February compared to their peak in January.
• Despite the shortage of new cars and trucks, the prices of used vehicles remain above historical norms.
• The new-car shortage in the US could persist for several more months due to Russia's invasion of Ukraine.

Used-vehicle prices in the U.S. decreased in February compared to January, indicating that while prices remain close to records, the increase in used-car prices may be slowing down.

On Monday, Cox Automotive announced that the Manheim Used Vehicle Value Index, which monitors prices of used vehicles sold at Manheim's U.S. wholesale auctions, decreased by 2.1% in February compared to January.

On average, historically, used vehicles are expensive. Despite a decline from its record high in January, the index is still up 36.7% from the previous year.

The global shortage of semiconductor chips used in cars, trucks, and SUVs has caused automakers to limit their production of new vehicles, resulting in a surge in used-vehicle demand and prices over the past year.

Although the prices of nearly all used vehicles have increased since last year, the percentage increase varies among different categories. Specifically, Cox's data reveals that compact cars and vans experienced a 44.9% and 48.4% increase, respectively, in February compared to the same month the previous year, while used pickups only saw a 24.8% increase.

The scarcity of new-vehicle inventories is evident in the disparity between the production of trucks and compact cars. Automakers such as Ford, General Motors, and Fiat Chrysler Automobiles have prioritized the production of their profitable pickup trucks over less profitable compact models during the chip shortage. As a result, consumers seeking to purchase a new compact car or SUV are more likely to encounter difficulties, while those looking to buy a new truck may have an easier time. Consequently, individuals looking for a new compact car or SUV may be more inclined to explore the used market, while truck buyers may have more options available to them.

Despite being resistant to disruptions, pickup-truck production has not been entirely immune to interruptions. The three major Detroit automakers have had to reduce truck production at times over the past year. And the issue persists: Ford recently announced that it has had to halt production of Super Duty pickups and large SUVs due to semiconductor shortages.

New semiconductor plants are being constructed by chipmakers such as Intel and TSMC in the U.S. in an attempt to increase global chip production.

While some automakers are waiting for factories to start operating, others are taking proactive measures. Ford announced in November that it will collaborate with chip supplier GlobalFoundries to enhance its product availability. Additionally, General Motors has started working with multiple chip manufacturers on new designs that will significantly decrease the product demand in future vehicles.

The supply of automotive semiconductors will improve later in the year, which is expected to decrease demand and prices for used vehicles.

Russia's invasion of Ukraine may worsen the chip shortage in the near future, as these countries are major suppliers of neon gas and palladium, which are essential for chip production.