Depreciation was ramping up as we approached October, and a few car segments bared the brunt of recent price declines.

And according to the latest Black Book Market Insights report, dealer sentiment across the country continues to focus on slowing buyer demand in the auction lanes.

This past week the full-size, compact and entry midsize car segments led price drops at auction, with rates dropping by 1.08 percent, 0.98 percent and 0.81 percent, respectively.

The full-size car price drop equated to a decline of $98 this past week. Black Book analysts pointed out the full-size car segment has declined more than the overall car average for four consecutive weeks and has accumulated depreciation of 3.26 percent during that same time frame.

Last week, overall auction prices for cars dropped by an average of 0.57 percent or $64. Black Book editors reported this is the highest weekly depreciation rate seen since the third week of July.

 “Recent wholesale activity is the leading indication that seasonal trends are setting in as buyers get cautious,” said Anil Goyal, vice president of automotive valuation and analytics.

And buyers in the lanes echoed this sentiment.  The Black Book editorial team overheard an auction attendee from Nevada noting, “Buyers report they are being cautious but that retail is still pretty good.”

On the truck side of the market, depreciation was not quite as dramatic, following trends seen over most of 2015. Last week, truck values dropped by an average of 0.21 percent or $33, and all segments experienced better than 0.4-percent depreciation. Black Book editors also pointed out that the 52-week average for truck depreciation also sits at 0.21 percent, which illustrates market stability.

Full-size SUVs are standing out at auction, as they have had a stronger weekly retention rate than the overall truck average for nine straight weeks. Last week, the segment saw a slight depreciation of 0.13 percent or $25.

The best performing segment among the trucks last week were the midsize pickup trucks, whose rates held steady with no movement.

On the other hand, the midsize SUVs saw the largest depreciation rate for trucks, with rates dropping by 0.39 percent or $67.

Buyers in the lanes are noticing truck strength, as well, as a buyer from Washington was overheard saying last week, “The truck market here has a strong supply of late-model units and sellers have adjusted prices to help complete sales.”

Q2 Residual update

The latest RVI Risk Outlook report took a look at residual movement as August came to a close, as well as predicting increased depreciation beyond what is seasonally expected.

In August, prices on 2- to 5-year-old vehicles fell, after being adjusted for seasonality. Nominal prices fell by 0.6 percent from July, but were up 1 percent year-over-year. After adjusting for MSRP, rates in August showed a decline of 0.7 percent from July and were down 1.4 percent year-over-year.

That said, the report stated that the “ decline in residual value is not observed in every segment, as larger vehicles and many luxury segments have seen increases in our index on a year-over-year basis.”

For example, the luxury coupe segment saw prices rise the most in August with a 2-percent jump from July and a 2.1-percent increase year-over-year. On the large vehicle side, the full-size SUVs were once again the strongest performer, with prices rising by 1.5 percent from July and 5.4 percent year-over-year.

RVI also took a look at leasing movement and how it directly pertains to the residual outlook for used vehicles.

In Q2 of 2015, the lease penetration rate equated for 20.2 percent of total sales.

“We expect the growth in leasing to continue over the next several years which will contribute to a growing supply of off-lease vehicles,” RVI analysts reported.

Of course, this will put increased downward pressure on used values in the coming years, especially relevant as the leasing rate is not supposed to slow down anytime soon.

RVI is forecasting an increase in leasing through 2017 and that the supply of used vehicles is expected to continue to grow in the market through 2020.

The report also brought up increased competition in the new-vehicle market, which will serve to ramp up incentive activity and add to the pressure on used residuals.

Consequently, RVI is forecasting used prices will fall by 6.6 percent from current levels by 2018.

One segment, in particular, might be hit particularly hard by this combination of factors pushing used prices down: the midsize sedans.

Prices for this segment fell by 5.9 percent in August; the market average was a decrease of 1.4 percent.

“The drop in gas prices over the past year along with the improved economic climate has decreased demand in the segment,” RVI analysts explained.

And the used supply for this segment is expected to continue to ramp up through 2017, before “leveling off,” which is expected to contribute to a price drop of 7 percent by 2018, also above the forecasted industry average.