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Historically, Used Vehicles Held More of their Value Last Month


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MCLEAN, VA - June 14, 2016: In their June Guidelines report, NADA Used Car Guide analysts observe that May depreciation accelerated as wholesale prices of used 8 year-old and newer vehicles fell by 2 percent compared to April. The finding is contrasted by a long-term metric analysts recorded: While monthly depreciation was higher, May's performance was better than expected and improved over the 2.7 percent average decline captured the past four years.

As a result of the past month's performance, NADA Used Car Guide's seasonally adjusted used vehicle price index rose by 0.7 percent to 119.1, notching the first increase recorded since November of 2015.

How Did May Prices Hold Up In Each Vehicle Segment?
The report covers each used vehicle segment in depth. Among some of the more notable takeaways:

  • Prices of used mainstream cars continued to fall at industry-high rates.
  • Compact car depreciation was the segment loss leader; it reached 3 percent.
  • Mainstream compact utility prices fell at an above average rate (2.5 percent, nearly 1.5-percentage points worse than April's decline) due to pressure from a growing pool of supply and higher new vehicle incentives.
  • Following a somewhat soft start to the year, mid-size and large pickup prices returned to form over the past two months by dipping to a combined average of just 0.4 percent.
  • On the luxury side of the market, all premium segments outperformed their mainstream counterparts.
  • Luxury compact utility prices declined the most of the group, slipping by 2.1 percent; losses for remaining luxury segments averaged just 1.2 percent.

What Does the Future Hold?
According to Jonathan Banks, executive analyst at NADA Used Car Guide, "Our June forecast has prices of vehicles up to eight years in age falling by 2.5 to 3 percent compared to May. The drop is similar to the 2.5 percent decline we saw during the same period in 2014 and '15. We expect depreciation in July and August to fall between 2.5 to 3 percent. Our full-year forecast remains unchanged from last month, with prices expected to be down 5 to 6 percent on an index-basis from last year."