Depreciation Slows in June, NADA Used Car Guide Reports
MCCLEAN, Va. — Used-vehicle depreciation slowed modestly in June compared to May’s more rapid pace, according to the NADA Used Car Guide, with prices for vehicles up to eight years in age falling 2.5% on a monthly basis in June, or more than a half a percentage point less than the 3.2% drop recorded a ... Read More »
MCCLEAN, Va. — Used-vehicle depreciation slowed modestly in June compared to May’s more rapid pace, according to the NADA Used Car Guide, with prices for vehicles up to eight years in age falling 2.5% on a monthly basis in June, or more than a half a percentage point less than the 3.2% drop recorded a month earlier.
While May depreciation was among the worst recorded for the month since 1995, June’s drop wasn’t so dramatic. As a result, the NADA Used Car Guide’s seasonally adjusted used vehicle price index dropped a 0.2% relative to May to 123.7.
“With the first half of the year now behind us, one could say used-vehicle prices have held up well despite mounting pressure from the new-vehicle market and rise in supply,” the firm said in its monthly newsletter. “After all, NADA UCG’s index slipped by just 0.6% over the first half of 2015 compared to the all-time high reached over the same period in 2014.”
Year-to-date depreciation stood at 9% relative to all of 2014, which, according to the firm, was only moderately higher than the 7.2% rate recorded last year and less than the nearly 10% year-to-date drop logged in 2013.
“Digging a bit deeper, we see the year’s steady performance is a result of strong truck prices compensating for weak car prices,” the firm noted.
Cars, subcompact, compact and mid-size car prices have been among the softest all year, which the firm said is due in large part to intense new-market competition — both within their respective segments and from high-demand crossover utilities. Lower gas prices haven’t helped the situation, either, the firm noted.
“For example, new subcompact, compact and mid-size car incentives were up by a combined 10% through May, and the average spent per unit for the trio is similar to what’s been spent on luxury compact and mid-sized utilities — vehicles costing thousands of dollars more,” the NADA Used Car Guide noted.
The downward pressure has taken its toll on used prices for the group, with compact and mid-size car prices falling nearly 3% on a monthly basis in June. Prices for the pair on a year-to-date basis were 11% lower, on average, than in 2014. “This compares to depreciation of 7% over the same period last year,” the firm said.
Subcompact cars have performed even worse, with prices for the smallest car segment plunging by an average of nearly 4% in both May and June. That brought year-to-date depreciation to 12%, which is four percentage points worse than last year’s mid-year figure.
“By comparison, prices for used trucks and utilities have remained strong,” the firm noted.
With prices declining by 2.1% in June, compact utility prices bounced back from May’s 3.3% fall. Depreciation for the group on a year-to-date basis stood at 7%, which is just slightly worse than last year’s 6% figure.
“In June, mid-size and large utility prices fell by averages of 2.2% and 1%, respectively, which brought YTD depreciation to 6% — essentially unchanged from 2014,” the firm said.
Down 1.8%, mid-size van movement was fairly typical for June; however, the 10% drop in value on a year-to-date basis is two points higher than last year’s 8% figure. As for large pickups, prices dipped by 0.5% in June, bringing year-to-date depreciation to just 4% — and industry low.
“Large pickups continue to be the market’s standout performer,” the firm noted. “Large pickup prices haven’t fallen by more than 2.5% on a monthly basis in five years, which is a threshold passed by compact and mid-size cars more than a dozen times.”
As for the luxury segment, losses were less substantial than what occurred in both May and last June, with declines ranging from 1.5% to 2%. “Even so, YTD depreciation for luxury cars i among the highest in the industry,” the firm said.
Luxury compact car prices were down 11% in June, while luxury mid-size and large car prices were off by 13% and 15%, respectively. As for luxury utilities, prices of compact and mid-size luxury utilities were down by respective averages of 8% and 10% so far this year.
“On a like-age basis, we continue to see trucks and SUVs outperforming their car counterparts,” the NADA Used Car Guide said. “Through the first half of 2015, large pickup prices were 7.3% higher than the same period last year. Other strong performers include the mid-size utilities and large SUV segment, whose prices were 4.1% and 3.1% higher than last year, respectively.
“Subcompact and compact car prices were 1.7% and 6.9% lower than last year, respectively,” the firm added. “On the luxury side of the market, compact and mid-size SUV prices were around 1% higher than last year, however, compact, mid-size and large car prices were down between 0.6% and 2.9%.”
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