Used car prices fall by a record. Carvana’s stock is up, a lot.

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Used car prices fell by a record amount for the month of June. This drove up the shares of used car dealers.

The Manheim Used Vehicle Value Index, a closely watched indicator of car prices, fell 10.3% in June from a year earlier. This is the tenth consecutive month of annual decline. June’s decline was a record high for the month, according to Cox Automotive, Manheim’s owning entity.

The used car price index is now about 17% lower than peak levels reached in January 2022. It is still nearly 40% above pre-pandemic levels.

Lower prices can be a mixed bag for the automotive sector. Lower used car prices may lead to lower new car prices, which may reduce profits at

Ford engine

(symbol: F) and

General Engines

(GM). Lower prices can also reduce sales gaps for dealers. A car bought by a dealer two months ago and still on the lot might be worth less today.

But lower prices also mean less pressure on consumers and more car sales.

The pressure on the consumer has been significant. The percentage of new car buyers paying more than $1,000 a month for their vehicle topped 17% in the second quarter, a record high. That’s a lot of money and one of the reasons new car sales remain about 10% below pre-pandemic levels.

At this point, investors don’t seem to be worried about lower prices for dealerships. They are more satisfied with less consumer stress and higher potential sales volumes.

carvana

(CVNA) stock is up 8.7% in midday trading Monday while the

S&P500
is flat and

Nasdaq Compound
is down 0.3%.

Shares of other dealers are also up.

CarMax

(KMX) is up 1.1% and

Lithium engines

(LAD) is up 1%.

carvana

stocks could do better than these as they have been hit harder than most dealer stocks, down more than 90% from peak levels reached in 2021. The company also announced on Monday that its sales total electric vehicle units had increased by 786% over the past five years. .

This means that while Carvana sold 100 electric vehicles per month five years ago, today it sells around 828 electric vehicles per month. This is just one example. Carvana did not disclose the number of electric vehicles sold. He said in the statement that the company had sold its first

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(TSLA) in 2014.

The news is not so optimistic for automakers. Shares of Ford and GM are down about 0.1% and 0.8%, respectively. Investors seem to be balancing increased volume from lower prices with the prospect of lower earnings per car sold.

Write to Al Root at allen.root@dowjones.com