Used vehicle depreciation rate increases in June

(July 19, 2016) MCLEAN, Va. — Wholesale prices of vehicles up to eight years in age fell by 2.4 percent in June compared to May. The dip met the expectations of analysts at NADA Used Car Guide.

While monthly depreciation was the most recorded in 2016, Jonathan Banks, executive analyst at NADA Used Car Guide said, "This June's performance was only slightly worse than the average 2.2 percent decline for the same period over the previous four years."

As a result, NADA Used Car Guide's seasonally adjusted used vehicle price index remained fairly flat. "It fell by just 0.2 percent to 119.9," Banks said.

The report points out that June prices of used mainstream cars continued to fall at a rate near record highs:

    • Subcompact cars depreciated 4.5 percent; the most within the category for the month.

    • Mid-size and large cars dropped 3.2 percent in value each. The drop falls in line with NADA Used Car Guide analyst expectations.

    • Compact cars fell 3 percent in June; a half-percentage point more than the previous 2.6 percent four-year average.

June wasn't all doom and gloom, however. After a soft start to the year, mid-size and large pickup prices slipped by a combined average of just 0.6 percent.

On the luxury side of the market, June losses were mixed across the board:

    • Luxury large cars depreciated 4.7 percent; the highest of all segments.

    • Luxury large and compact utility segments fell by an average of 2.8 percent.

    • Losses for remaining luxury segments averaged 1.9 percent.

What does the future hold?  NADA Used Car Guide forecasts prices of vehicles up to eight years in age to fall by 2.5 to 3 percent compared to June. August and September depreciation is expected to fall between 2.5 to 3.5 percent, with full year price depreciation at about 5 percent on an index basis from 2015.