Auction Prices Experiencing Seasonal Declines; Predictions for 2014 Rates
Though showing some seasonal softness, the first week of fall didn't bring too many changes the way of auction prices, as according to Black Book’s Ricky Beggs, the average segment price change for both cars and trucks saw smaller declining levels than the prior week.
Last week, the overall average segment change was a drop of $73, lower than the the most recent three-week average of -$78, reported Beggs, Black Book editorial director and senior vice president, in his latest "Beggs on the Used Car Market," video report.
Beggs explained that even though the market is experiencing seasonal price declines, Black Book survey personnel is hearing more comments of the wholesale markets "leveling off" from larger price declines of the past month.
And interestingly, reversing trends seen in recent weeks, as gas prices continue to decline for the third week in a row, the fuel-efficient segments seem to be retaining their price strength.
"Gas prices continued to decline this past week by $0.05 for gas and $0.025 with the diesel pumps, with this being the third straight week for gas and diesel declining prices," said Beggs.
"In traditional times, one would think the more fuel efficient vehicles would be in less demand, thus bringing softer values within the wholesale market channels. When looking at the four car segments with the smaller declining levels, they are all from the more fuel efficient vehicles."
Specifically, prices for entry midsize cars fell by $29, and the upper midsize cars saw a $30 decline, both significantly lower numbers than the average segment decline.
The entry level cars (-$31) and the compact cars (-$35) both had a strong price retention performance, as well.
"Of the best four (car segments), all of them had dollar declines of less than half that of the segment average," Beggs added.
Trucks, at an average decline of $54 last week, saw price declines from as low as $14 for the compact pickups to as much as $123 for the luxury SUVs, Beggs reported.
"When looking at the past three weeks of average change, the full-size pickups and the compact pickups 'lead the pack,' in price retention," he concluded.
Where Prices May be Headed
Looking ahead, what does the rest of the year and beyond have in store?
In his latest post on NADA Used Car Guide’s Used Car & Truck Blog, Jonathan Banks said he expects auction prices for units 1-to-3 years of age will continue to slide through 2014 due to expanding supply, strong new-vehicle demand, and higher incentives.
"Conversely, we expect the advances in dependability and affordability relative to newer used models, as well as a rolling wave of lower supply, will keep prices for older models high over the same period," Banks explained.
Breaking the numbers down, NADA UCG expects prices of 1- to 3-year-old units will finish up the year with 1.5 percent lower prices than similar aged units in 2012.
On the other hand, Banks expects prices for units 4-to-6-years old to end up 1.5 percent more expensive than like-age unit prices were last year.
Looking on to next year, 2013 model-year vehicles are predicted to see price slides of 16 percent year-over-year through 2014, according to NADA predictions.