The top executive at Group 1 Automotive doesn’t foresee a “dramatic” fall-off in used-car prices, and while there are certainly downward pressures on values, Earl Hesterberg pointed out a few mitigating factors at play when he addressed questions during the company’s quarterly conference call.

In the Q&A portion of Thursday’s call, an analyst brought up the widespread concerns about a potential drop in used-car prices that seem to be at odds with the transaction price strength that Group 1 and its peers have enjoyed.

In addressing the analyst’s question, Hesterberg — Group 1’s president and chief executive officer — acknowledged pressures that are negatively impacting used values, but also explained other dynamics at work.

“I think the relative price level probably will continue to be under a little bit of pressure, but as you may have noticed, our CPO business grew a lot,” Hesterberg said.

“And I think because there’s an increasing supply of off-lease vehicles, particularly for the luxury brands, that’s driving up some of the average transaction prices and that will probably continue,” he continued. “But there will also continue to be increasing off-lease supply, which may put a little negative pressure.

“So, maybe the mix is richening up a bit, but I think the supply and the aggressive marketing of new vehicles is going to continue to put a little downward pricing pressure on used-vehicle prices overall,” Hesterberg said.

The analyst then followed up with a question to gauge how problematic this trend may be when it comes to trade-in values and consumers not having as much value in their cars. Again, Hesterberg does not see this being a huge problem, at least in the short term.

“I don’t think it’s going to be a big deal in the near term. I think that only becomes a big deal if it’s something dramatic,” he noted. “And I don’t see anything dramatic happening.”

NADA Used Car Guide addressed some of these very concerns in its latest Perspective report.

While listing several factors likely to drive strength in used prices — including economic gains, declining unemployment, gains in home prices and significantly lower fuel costs — NADA said it believes these positive impacts won’t be able to match the downward pressures. Credit conditions won’t be quite as rosy, and the impact of that plus new-market pricing pressures  and what NADA called the most important factor (increased used supply) will dampen used prices.

How much? NADA pinpoints the year-over-year decrease for vehicles up to 8 years old somewhere between 2 percent and 2.5 percent this year.

“Looking further ahead, used price movement will be determined by a variety of factors, some of which will be harder to predict than others. Automaker production and incentive actions are just two factoring examples,” NADA’s report explains.

“However, we can pinpoint used supply growth with far greater accuracy and can state with confidence that the additional volume will pressure down prices even more in the coming years,” it adds. “Recognizing this, lenders, automakers and others with longer-term investments in used vehicles can better prepare for the challenges that lie ahead.”

Offering a different take, Jeffrey Brown, the new CEO of Ally Financial, also addressed used-car prices during his company’s most recent quarterly call.

“Used-car prices have continued to soften. I think that is more a supply dynamic than anything else. Again that’s created some volatility in some of our margin line items where lease gains run through,” he said.  “We would expect used-car prices to keep coming down in the neighborhood of about another 5 percent this year.”

Editor's Note: Staff Writer Nick Zulovich contributed to this report.