Guidelines — August 2015

NADA Used Car Guide

Prices of used vehi­cles up to eight years in age fell by 2.2% on a month­ly basis in July, essen­tial­ly hit­ting the mid­point between NADA Used Car Guide’s 2% ‒ 2.5% fore­cast for the month.

While July’s fall was a vast improve­ment over last year’s 3.2% drop, it was some­what worse than the month’s his­tor­i­cal per­for­mance. As a result, NADA UCG’s sea­son­al­ly adjust­ed used vehi­cle price index declined mod­er­ate­ly, falling by 0.9% from June to 122.6.

Once again, price move­ment was a tale of two extremes as rel­a­tive­ly mild util­i­ty and pick­up loss­es coun­ter­bal­anced severe car depre­ci­a­tion.

Sub­com­pact prices fell by a hefty 4.3% last month to pre­serve the segment’s sta­tus as one of the market’s weak­est per­form­ers. Prices for the group have fall­en by 13% since March — tops in the indus­try.

Dis­play­ing com­pa­ra­ble weak­ness, com­pact and mid­size car prices have been excep­tion­al­ly soft over the past few months. Prices for the two fell by an aver­age of 3.2% in July, there­by plac­ing them 11% low­er than they were at the end of the first quar­ter.

Lux­u­ry car prices have not fared any bet­ter. Prices for lux­u­ry mid-size cars dropped by 3.4% last month, while loss­es for lux­u­ry com­pact and lux­u­ry large cars reached 2.4% and 2.7%, respec­tive­ly. Sim­i­lar to main­stream cars, lux­u­ry car depre­ci­a­tion was above aver­age ― from a his­tor­i­cal per­spec­tive ― over the sec­ond quar­ter of the year. Trucks ― on the oth­er hand ― have done excep­tion­al­ly well. Prices of com­pact and mid -size util­i­ties — both main­stream and lux­u­ry — fell by a rel­a­tive­ly light aver­age of 1.6% in July, while prices of mid-size vans slipped by a less­er 0.9%. While util­i­ty depre­ci­a­tion was typ­i­cal, the same is not true for mid-size vans. Prices for the seg­ment have fall­en by an aver­age of 2% in July over the past sev­er­al years. With prices unchanged from June, large SUVs and large pick­ups defied depreciation’s down­ward pull last month. In par­tic­u­lar, large pick­ups have been impres­sive for some time now. Prices for the group have fall­en by just 4% so far this year, which is remark­able con­sid­er­ing the thou­sands of addi­tion­al miles and wear and tear the major­i­ty accrued over the peri­od. On an annu­al

AUCTION VOLUME TRENDS
Auc­tion vol­ume of mod­els up to 8 years old reached near­ly 310,000 units in July, down 6% from June’s total. Vol­ume was low­er across all mod­el years, save 2015 where it jumped by 56% from June to 27,500 units. While vol­ume for the 2015 mod­el year con­tin­ues to rise, the oppo­site is true for 2014 mod­els as vol­ume dropped by an addi­tion­al 12% last month to 46,000 units. Sup­ply for 2012 and 2013 mod­els slumped by an aver­age of 13% to 54,000 and 50,000 units, respec­tive­ly, while vol­ume for 2007 ‒ 2011 mod­els fell by a range of 4% ‒ 8%. July’s activ­i­ty pushed auc­tion vol­ume year-to-date to 2.51 mil­lion units, or 7% more than last year’s sev­en-month total. Vol­ume for the 2015 mod­el year is 6% high­er than it was for 2014 mod­els last year, while 2013 and 2014 sup­ply is up by an aver­age of 20% on a like-age basis. Deal­ing specif­i­cal­ly with late-mod­el vehi­cles (up to 5 years old), year-to-date growth has been led by sub­com­pact cars (+58%), large cars (+39%) and large pick­ups (+39%). The share of total vol­ume for each cur­rent­ly stands at 5%, 6% and 9%, respec­tive­ly. Com­pact and mid-size cars con­tin­ue to dom­i­nate auc­tion vol­ume where share sits at 17% and 21%, respec­tive­ly. Com­pact car vol­ume is up 26% year-to-date, while mid-size car vol­ume is up 5%. Com­pact util­i­ty vol­ume is up 7% and over­all share stands at 12%.

AUGUST USED VEHICLE PRICE FORECAST
NADA Used Car Guide’s fore­cast for August has prices of vehi­cles up to eight years old falling by 2.2% ‒ 2.7% com­pared to July. This year’s antic­i­pat­ed rate of depre­ci­a­tion would be mar­gin­al­ly bet­ter than the near­ly 3% decline record­ed in August 2014, but some­what steep­er than the rough­ly 2% decline aver­aged in the two years pri­or. Keep­ing with recent trends, sub­com­pact car depre­ci­a­tion should top oth­er main­stream seg­ments, fol­lowed by com­pact and mid-size cars. Loss­es for the group should exceed the high end of our over­all fore­cast, while util­i­ty, van, and pick­up depre­ci­a­tion should be near-to, or below the low-end. Lux­u­ry vehi­cle loss­es should be sim­i­lar to those of main­stream cars. Glanc­ing ahead to Sep­tem­ber and Octo­ber, NADA’s fore­cast has prices drop­ping by approx­i­mate­ly 3% ‒ 3.5% per month, sim­i­lar to what was observed last year.



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