Wholesale used vehicle prices over the first two weeks of November were noticeably stronger than what is normally seen for the period as prices remained essentially unchanged from October’s levels.
From July through September, monthly depreciation averaged just 2.0%, and October’s fall of 2.3% was decidedly better than the month’s 3-to-4% historical average.
November appears set to improve upon this trend as wholesale prices have fallen by a barely noticeable 0.1% compared to October, which is a significant improvement over the 2-to-3% average fall for the month.
Prior to Hurricane Sandy, it was expected that the already taunt relationship between used vehicle supply and demand would see little change in the trend of depreciation outperforming historical levels, but the destruction left by the storm has exacerbated this relationship and there has been a predictable reaction in used prices.
While depreciation for all segments has slowed, mid-size car and van prices have actually increased slightly, by 0.7 and 0.6%, respectively. The heavy fleet presence of these segments and the fact that price growthhas been primarily concentrated in model years 2011 and 2012 suggests that rental companies are looking to the used market to satisfy the temporary transportation needs of consumers whose vehicles were either damaged or destroyed by the storm.
As far as the coming weeks are concerned, NADA expects that price movement will deviate little from the present course. Considering the prevailing relationship between used vehicle supply and demand along with the disruption caused by Sandy, used prices will likely remain flat through November and December instead of progressively softening as is typically the case.