Jonathan Banks's Articles

What New Vehicle Incentives Mean to Used Car Prices

It makes sense: incentivizing someone to purchase a car with cash, finance deals or lease deals reduces the price of that vehicle down the road. But just how much the different types of incentives impact used prices may surprise you.   A new vehicle cash incentive of $1,000 reduces the price of a one-year-old used vehicle by nearly $600, while $1,000 spent on finance and lease incentives reduces the price of that same one-year-old vehicle by $165 and $89, respectively.  If market conditions, such as the economy, time of year, level of supply, etc. and manufacturer suggested retai ...

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September Marks Highest Rate of Used Vehicle Price Decline since October 2012

The average price of used units up to eight model years in age fell by 2.6% in September, marking the highest rate of decline recorded since the 2.9% tumble in October 2012 and ending a three-month period in which depreciation averaged an uncharacteristically low rate of 1.2%, according to the most recent issue of Guidelines. While the drop high compared to the previous 10 months, it was less severe than the 2.7% average rate of depreciation recorded for the month of September from 2005 to 2012, excluding the recession years (2008 and 2009). As a result, NADA’s seasonally-adjusted used ve ...

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Looking Ahead: What to Expect for Later- and Older-Model Prices

Recap on later- and older-model price shift In previous blog posts, we discussed some of the reasons impacting the price shifts across models years, with later-model prices softening more than those of their older counterparts. First, we looked at how the improving economy is impacting auto demand in general; with further analysis, we see that these economic forces – lower unemployment rates, a resurgent housing market, equity market gains and a competitive lending environment – are doing much more to increase new vehicle demand. Second, we explored the impact improved quality and dependabil ...

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Quality + Dependability = Higher Older-Model Prices

In a recent blog post, we discussed the impact of new market forces on later-model prices to help explain the shift in pricing of used cars across model years. But it doesn’t stop there; more than just economic growth, there are other key areas that impact the price of used cars, including advancements in quality and dependability. Historically speaking, vehicles over five years of age have taken a back seat to their younger, in-warranty counterparts in terms of demand. The result? Vehicles five years of age and older comprised  a very small percentage of the available stock on a franc ...

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Shifting Preferences: New Vehicle Demand Eclipsing Used

While it’s widely known that used vehicle prices have experienced an extraordinary period of growth over the past few years, lesser known is the extent that prices grew across the vehicle age spectrum. Over the first half of 2013, used vehicle prices were essentially equal to 2012’s historically high average when measuring on an aggregate basis. However, a deeper analysis reveals discernible shifts across model years, with later-model (those less than four years of age) prices softening more than those of their older counterparts. What does this mean? NADA primarily attributes these dive ...

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Fuel for Thought: August Proves another Great Month for Used Car Prices

Good news! Used vehicle prices remain at a historically high level with only a small drop of 1.1% in August, matching the average rate of loss in June and July. This comparatively light drop in August (prices fell 1.5% and 2.3% for the month in 2012 and 2011, respectively) lifted NADA’s seasonally adjusted used vehicle price index to 124.8, the highest level recorded so far in 2013. In Guidelines, our monthly automotive market report on new- and used-vehicle sales trends and used-vehicle price movement, we explored the biggest question for this trend: why?  In a sentence, an ongoing ...

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2014 Mercedes-Benz E Class: Don’t call it a Facelift

 Last month I had the opportunity to log several hundred miles behind the wheel of Mercedes’ updated 2014 E Class during a full-line media review of the model (sans AMG variants) held outside of Portland, Oregon.  While the 2014 model is technically a mid-cycle refresh, it’s tough to discern this from the E Class’ heavily revised exterior.  In fact, if it weren’t for a few unchanged details and a slightly more informed eye, one could easily mistake the updated design for an all-new one. Starting with the exterior, all E Class body styles were given more modern – and decidedly m ...

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No Vacation for the Chevrolet Cruze: GM Continues Production Next Week

The week of August 26th was supposed to be a vacation for the Chevrolet Cruze plant in Lordstown, Ohio, but GM officials report that they have canceled the planned lull in production due to a recent spike in demand for the Cruze.  Plant workers will be reporting to work as normal next week as GM continues to crank out the hot-selling sedan. We know that Cruze sales have been good, but just how good?  To get a better understanding, let’s take a quick look at the compact car segment performance of the Cruze along with two of its closest direct competitors, the Ford Focus and Honda Civ ...

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’13 Ford Fusion and Honda Accord Tops in Used Value Retention

This year has been a notable one for mid-size cars, or the segment that perhaps most embodies the characteristics of practicality, versatility, and “every-day driver”. Considering the significant number of new mid-size cars sold each year – the segment accounted for 16% of all new deliveries in 2012, second only to the 19% share assumed by compact cars – having a viable competitor is an essential element in any mainstream manufacturer’s well-rounded product portfolio. While profit margins on cars are substantially less than on most trucks, the imbalance per unit can be made up in volume, and ...

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Chevrolet Juices the Volt: Can GM Goose Sales with a $5k Price Cut?

 In April’s edition of Guidelines we ran a special feature on the Chevrolet Volt and Nissan Leaf which highlighted the sales performances of the two most well-known and best-selling plug-in electric vehicles in the U.S. market today.  It’s been a few months since the last article, so let’s take a brief look at how things have changed in the interim for each model. Starting with the Leaf, back in January of 2013 Nissan announced that they would lower the entry MSRP of the Leaf by $6,400 to take the base price from roughly $35,200 down to $28,800 (not including destination).  Sub ...

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