Wholesale used vehicle prices, tracked by Cox Automotive, peaked nearly two years ago and have since plunged into a bear market. The declines are a welcoming sign and give the Federal Reserve much-needed breathing room for interest rate cuts this year. The Manheim Used Vehicle Value Index fell to 204 in December, marking a 7% decrease from the same month in 2022. After reaching a peak of 257.7 in December 2021, the index has plunged 21% – this is the most severe drawdown for the index ever. “December’s decline brought a volatile year to a close,” said Jeremy Robb, senior director of Economic and Industry Insights for Cox Automotive.Robb continued, “The spring bounce was much more pronounced than expected in 2023, and prices slid just as rapidly after that bounce, finishing more calmly in December as expected. The 7.0% year-over-year loss was larger than our original forecast, but it pales in comparison to the nearly 15% decline we had a year earlier. 2024 is looking to be less volatile than 2023, but we’ve been taught to expect the unexpected in the wholesale market.“Compared to December 2022, compact cars were the worst performers across all major market segments, falling 11.7%, followed by midsize cars, losing 8.1%, and vans, down 7.9%.In a separate report, CFRA Research’s Sam Stovall told clients in a note that US new vehicle inventories in early December were around 71 days of supply, up 37% from one year earlier. The average price for a new vehicle in November was down 1.5% year-over-year to $47,456, while used vehicle prices were down 1.6% to $26,091, according to Edmunds. Falling auto prices come as Bankrate data shows the average borrowing rates for used cars are at lofty levels, making price affordability challenging for many consumers. JPMorgan’s Michael Cembalest published a note last week that said falling used vehicle prices have given the Fed “breathing room” ahead of expected interest rate cuts this year. What do falling vehicle prices mean for everyone who bought during the Covid mania? Well, read this: Number Of Americans In Upside-Down Auto Loans Continues To Worsen. More By This Author:Bitcoin & Big-Tech Burst Higher Amid Bloodbath In Boeing & Black GoldInflation Expectations Tumble To Lowest Since Jan 2021Boeing & Spirit AeroSystems Shares Plunge After Max 737-9 Max Door Blowout Incident