USED MARKET UPDATE
Wholesale used vehicle prices fell by 1.9% on a monthly basis in August. That figure is moderately better than NADA Used Car Guide’s 2.2% ─ 2.7% forecast and a substantial improvement over the nearly 3% fall recorded last year. The month’s result placed NADA Used Car Guide’s seasonally adjusted used vehicle price index at 123.1, up a slight 0.3% from both July (2015) and August (2014). Considering the index is down a mere 0.5% year-to-date, used vehicle demand — and thus prices — has remained strong despite higher new vehicle incentives (particularly lease incentives) and an ongoing rise in supply.
That established, the market has clearly favored trucks, while cars have languished.
Subcompact car prices continued to nosedive last month, dropping by an industry-high 3.4%. Prices for the group have fallen by 14.6% yearto-date, second only to the luxury large car drop of 16.2%. For perspective, overall industry prices have fallen by 10.4%. A burgeoning supply of subcompact cars at auction isn’t helping matters for the low demand segment. Supply for the group has grown by more than 30,000 units over the year, up nearly 60% from 2014.
Compact and mid-size cars fared a bit better in August than in the three months prior when depreciation exceeded 3%. The month’s combined 2.4% tumble was still above-average for the period. Large c fared a bit better as depreciation for the group stopped just short of 2%. Year-to-date depreciation for the trio stands at 12.1%, nearly 2 percentage points higher than the industry average.
Generally speaking, truck losses were roughly half those of cars last month. Mid-size pickup, large pickup, and mid-size utility depreciation averaged 1%, while compact utility prices were down by a steeper 1.7%. Large SUV prices were (once again) flat. Mid-size van depreciation has exceeded 2% in August more often than not over the past 15 years; however, prices fell by just 1.2% last month.
Mid-size pickup prices have fallen by a skeletal 3.1% so far this year, while large pickup depreciation stands at an almost equally impressive 4%. Mid-size utility prices are 7.2% lower year-to-date, while compact and mid-size van prices are down 8.3% and 11.4%, respectively.
Luxury car and truck losses were generally lighter than in both July (2015) and last August (2014). Luxury mid-size car depreciation slowed the most, moving from 3.3% in July to just 1.4% last month. Prices for other luxury segments fell by an average near 2%. For the year, luxury compact and luxury mid-size utilities prices have fallen by 9.7% and 10.9%, respectively, while luxury compact and luxury mid-size car prices are down 12.9% and 14.3%, respectively.
AUCTION VOLUME TRENDS
A portion of August’s pricing strength can likely be traced to lower auction supply. Volume of models up to 8 years old reached 291,000 units in August, down 8% from July’s total. August’s total was also 6% lower than last year’s 310,000 unit figure.
Compared to July, no model year (MY) realized an increase in volume, including MY15 which had experienced consistent growth in supply in prior months. Volume for the year fell by 10% from July to 25,000 units.
Supply for MY12 and MY13 fell by an average of 12% to 47,000 and 45,000 units, respectively. Volume for MY14 also reached 45,000 units, down 3% from July. Volume for older models was off by an average of 5%.
Year-to-date volume stands at 2.81 million units, up 6% from the same period last year.
Volume for MY15 is 5% higher than it was for 2014 models last year, while 2013 and 2014 supply is up by an average of 18% on a like-age basis.
SEPTEMBER USED VEHICLE PRICE FORECAST
NADA Used Car Guide’s forecast for September has prices of vehicles up to eight years old falling by 2.5% ─ 3% compared to August. This year’s anticipated rate of depreciation would be slightly better than the 3.4% decline recorded in September 2014, but right on par with the 2.7% decline averaged in the two prior years.
Depreciation for the month is expected to be the greatest in the mid-size van segment, followed closely by subcompact and compact cars. Losses for the three should reach or come close to the high end of our overall forecast, while mid-size car, utility, and pickup depreciation should be near-to, or below the low-end. Luxury vehicle losses should be
more severe than those of mainstream cars.
NADA’s forecast has prices dropping by approximately 3% in October.
SEPTEMBER OFFICIAL USED CAR GUIDE VALUE MOVEMENT
Trade-in values in September’s edition of the NADA Official Used Car Guide decreased by 2.8% relative to August. Cars values were lowered by a combined average of 3.3%, which was worse than the truck segment’s combined average of 2.5%, making this the fourth consecutive month trucks outperformed cars. Entry Subcompact cars performed the worst. As a result, values were lowered by 5%. On the opposite end of the spectrum, large SUVs performed the best as values were only lowered by 0.3%. Luxury vehicle values were lowered by 2.4%, which was better than the mainstream average of 2.8%.
This is the fourth straight month where luxury vehicles outperformed their mainstream