NADA: Used-Vehicle Prices Drop, But Still Above Average
Rising supply and steady demand moderate used-vehicle price fluctuations
MCLEAN, VA--June 12, 2013: Prices for used cars and light trucks up to 8-years-old declined 2.1% in May--the largest drop since last October, says the NADA Used Car Guide in the June edition of Guidelines .
In terms of U.S. dollars, the average trade-in price of used vehicles up to 8-years-old slipped from $15,320 last year to $15,263 in May 2013 year-to-date, a modest drop of $57.
"While prices this year have held up well, a growing supply of 3-year-old vehicles is applying downward pressure on prices for late-model used vehicles," said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide.
Banks said the increase in used-vehicle supply, in part, is the result of more fleet and lease sales after 2009, the same time new-vehicle sales hit a 30-year low with fewer trade-ins.
"Some used-vehicle segments are feeling the squeeze of higher supply more than others," he added.
NADA estimates that the late-model supply of midsize cars and compact and luxury utility vehicles has increased on average by 16%. By comparison, the late-model supply for the overall market has increased by 8%.
Trade-in prices for midsize cars have depreciated by 2.8% over the first five months of the year, from an average of $13,120 in January to $12,749 in May, NADA says. Overall market prices have declined by 1.9% over the same five-month period, while prices for full-size pickup trucks are up nearly 1%. Prices of used luxury cars and utility vehicles have fallen the most this year, down 3.3% on average.
"Despite the price declines in May, there is little evidence to suggest a substantive negative change in any of the major drivers underpinning overall used-vehicle price performance," Banks said. "With gasoline prices holding steady and consumer sentiment at its highest level since 2007, we're expecting an above-average performance in June."
Average trade-in values in June's edition of the NADA Official Used Car Guide were reduced by a modest 1.3%. NADA expects that price depreciation for compact and midsize cars will be among the highest recorded in June with depreciation of midsize and luxury utility vehicles following closely behind. Price declines for full-size pickup trucks are expected to remain minimal for another month.
Just like the new-vehicle market (sales up 7% in May YTD), used-vehicle demand is supported by favorable credit conditions, stable gasoline prices, rising consumer confidence and higher home prices, Banks added.
NADA's seasonally-adjusted used-vehicle price index moved to 122.1 in May, which was a 0.6% improvement over April's figure 121.3. With a year-to-date loss of just 0.4%, the index's five-month average of 122.5 remains just slightly below 2012's historical peak of 122.9. The index is a seasonally adjusted measurement of the change in price for used vehicles up to 8-years-old.
About the NADA Used Car Guide
Over an 80-year history, NADA Used Car Guide has earned its reputation as the leading provider of market-reflective vehicle valuation products, services and information to businesses throughout the U.S. and worldwide. NADA's editorial team collects and analyzes more than 1 million combined wholesale and retail automotive-related transaction prices per month. Its guidebooks, auction data, analysis and data solutions offer automotive, financial, insurance and government professionals the timely information and reliable solutions they need to make better business decisions.
The NADA Story
NADA has been the voice of the dealer since 1917. That's when 30 auto dealers traveled to the nation's capital to convince Congress not to impose a luxury tax on the automobile. They successfully argued that the automobile is a necessity of American life, not a luxury. From that experience was born the National Automobile Dealers Association. Today, NADA represents nearly 16,000 new-car and -truck dealerships with 32,500 franchises, both domestic and international.