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.