The September U.S. used vehicle market saw depreciation climb and prices drop -3.6%, making the month’s performance the largest decline recorded in 2016 thus far. As a result, NADA Used Car Guide’s seasonally adjusted used vehicle price index fell by -1% to 117.5, the lowest level since March 2011.
“Price movement down was led by mainstream small cars. Sub-compact and compact car segment losses reached -4% each,” said Jonathan Banks, of NADA.
Luxury mid-size and luxury compact utility losses were the largest of all luxury segments for the month – just under -4%. The data reflect used vehicles up to eight years old coming on the market. It’s good news for buyers, but not necessarily for auto dealers or automakers.
In NADA Used Car Guide’s recently published Monthly Guidelines, analysts forecast prices of vehicles up to eight years in age will fall by around -3.5% during October compared to September. During October 2015 prices fell by an average of just under 3%.
Analysts expect depreciation to slow toward the end of the year. In November, prices are expected to fall by under -2%, followed by an even smaller sub-1% decline in December. The full-year forecast expects prices to be down by an average of around -4% on an index-basis from 2015.
Trucks OK
Following a long-running monthly trend, pickup truck price losses were light in September. Mid-size pickup losses reached only -1.6%, while large pickup prices fell by a lower -1.3%. Over the previous three years, losses for both pickup segments averaged -2.1%, historically low when looking at the bigger market picture. Year-to-date, auction sales volume of models up to eight years of age stands at 3.48 million, up 7%. Late-model auction volume (vehicles up to three years old) experienced an 11% increase compared to the same period in 2015 reaching 2.04 million. The biggest increase occurred on 2013 models, up 31.4%, which was comprised mostly of off-lease vehicles returning to the marketplace.
At the segment level, volume for vehicles up to three years in age continues to be dominated by mid-size and compact cars. However, compact and mid-size utility, as well as large pickup volume, have grown substantially. The group’s share is catching up as a result. Overall, the collective of the three truck segments stands at 32% growth year-to-date, up 6-percentage points from last year’s 26% figure.
October 2016 Used Vehicle Price Forecast
NADA Used Car Guide’s October 2016 forecast has prices of vehicles up to eight years in age falling by -3.2% to -3.7% when compared to September. The anticipated drop is more than the -2.7% decline averaged for the month in 2015.
Subcompact and compact car prices are expected to drop by just under -4%, while mid-size and large car prices should fall by an average of around -3.5%. Prices for car segments fell at lesser rates last October.
Compact utility and mid-size utility depreciation is expected to reach around 3.3%, while mid-size van prices are expected to fall by around -3.8%. Large pickup and large utility depreciation should increase and prices should decline by around -3%. Luxury segment losses — both car and truck — are expected to average -3.1% to -3.4%.
Looking forward, monthly losses are expected to be softer for the remainder of the year. As a result, NADA Used Car Guide’s full-year forecast has prices down by an average of -4% on an index-basis from 2015.
