NADA: New and Used Auto Demand Blossoms in May
McLEAN, VA--June 11, 2014: Seasonal demand lifted NADA's used vehicle price index to 126.8, 0.5% better than the previous record set a month earlier, according to the National Automobile Dealers Association (NADA) Used Car Guide in the June edition of Guidelines, a monthly report on new and used vehicle sales trends and price movement.
"Auto demand blossomed in May as warmer weather and the fast approaching summer vacation season pulled more consumers to dealer lots," said Jonathan Banks, executive automotive analyst of NADA Used Car Guide.
Prices for used vehicles up to eight years in age fell by 2.2% compared to April, an outcome slightly better than what has historically occurred in the month of May, and what has led to the increase in prices when seasonally adjusted.
Depreciation across segments resembled what was observed in 2011 and 2012, where declines for small and mid-size cars exceeded the overall market average, while losses for other segments were at or below the industry mean.
Subcompact, compact and mid-size car prices collectively tumbled by 2.8% in May, while luxury compact cars and large SUVs were two other bigger moving segments with 2.4% and 2.4% drops, respectively. The decline in small luxury cars is not unusual; however, this was only the second time since early 2011 that large utility prices dropped by more than 2%.
Wholesale prices over the first five months of the year were decidedly stronger than what was recorded for the period last year. As a result, prices year-to-date are 2.9% higher than they were through May in 2013.
With prices nearly 12% above last year's level, large pickup growth continues to lead other segments by a wide margin. Year-to-date growth for other truck segments – large SUVs and mid-size utilities/vans – has also been substantial with prices up by 7.2% and 4.7%, respectively.
Auction volume for the 2013 model year is currently comprised largely of off-rental units; because of this, volume is concentrated in the rental-heavy compact utility, compact and mid-size car, and mid-size utility and van segments. When concentrating on models within these segments where auction volume was greatest, depreciation tended to be most severe for Ford vehicles last month.
"A combination of pent up demand and restrained supply stemming from severe winter weather drove prices well above expectations in March," said Banks. "Over the past two months, though, prices have steadily realigned with NADA's predicted path."
NADA's forecast for the summer remains unchanged from May's edition of Guidelines, with used vehicle depreciation expected to fall between 2%-2.5% in June and 1%-1.5% in July before accelerating to roughly 2% in August.