After falling by 2.1% in May, depreciation for used units up to eight model years in age has slowed to just 1.1% over the first half of June. This modest decline is substantially less than what has historically been recorded for the month, and as a result, NADA’s seasonally adjusted used vehicle price index jumped to 123.4 so far this month, which is a 1.2% improvement over May’s figure of 121.9.
Across segments, losses month-to-date have been predominantly better than what was observed in May. This is particularly true for compact and mid-size cars, where depreciation eased from a combined rate of 3.2% in May, to 1.8% through mid-June. That being said, the two car segments continue to lead all other vehicle types in depreciation.
Prices for the majority of remaining segments have dropped by 1.1% or less, excluding large SUVs where prices have grown by 0.1%. NADA expects that losses for June as a whole will remain comparatively mild and that the month will close with depreciation similar to the 1.3% average drop recorded in June’s edition of the Official Used Car Guide.
As far as the next few months are concerned, there is little evidence to suggest a material negative change in any of the major drivers underpinning used price performance. It’s expected that increasingly favorable credit conditions, relatively stable gasoline prices, rising consumer confidence, and a recovering housing market will largely counterbalance the downward pressure associated with an increase in late-model used vehicle supply.
As a result, NADA predicts that used vehicle depreciation will change little from its present course over the next two months, with used prices falling within a range 1.5 – to – 2.0 percent in July. Compact and mid-size car losses should continue to be among the highest recorded, followed by compact, mid-size and luxury utility depreciation, while pickup losses are expected to remain minimal over the period.