McLEAN, Va. -

There appears to be a rather significant divide in the auction lanes between older and newer vehicles this year when it comes to their supply and pricing behaviors.

How so?

According to the latest Guidelines report from NADA Used Car Guide, there has been a 17.7-percent year-over-year decline in AuctionNet auction supply for cars between ages five and eight, pushing up prices by 0.6 percent.

Meanwhile, there has been a 7.7-percent lift in supply of vehicles between ages one and four, leading to a 1.6-percent price drop.

“While prices in general have held up quite well so far this year, used-vehicle supply is having a contrasting effect on prices across model years and segments, with rising late-model supply applying varying degrees of downward pressure of newer model years, and declining older-model supply supporting less contemporary unit prices,” NADA Used Car Guide’s Jonathan Banks said in the report.

He added: “These asymmetric supply trends have been largely responsible for the 0.6 percent average lift on older prices and the 1.6 percent average decline on newer unit prices.”

Segment Behavior

The pricing variance can also be observed when looking at different vehicle categories. The Guidelines report goes on to break down wholesale price behavior by segment, finding that the greatest month-over-month drops in prices during May were for the compact car (down 3.3 percent) and midsize car (down 3.0 percent).

Similarly, Black Book found that entry midsize cars had the greatest sequential (down 3.6 percent) and year-over-year (down 21.1 percent) price declines in May. Upper midsize car prices were off 2.4 percent month-over-month in May, according to Black Book, with compact prices off 1.8 percent.

NADA detailed why it believes compacts and midsize cars dropped in value last month.

“The higher rate of depreciation for the two segments isn’t surprising given their large rental fleet presence and the fact that rental companies historically remarket greater quantities of prior-model-year units through the spring,” Banks said.

“In addition, larger quantities of key models were placed into rental fleets for the 2012 model-year relative to their 2011 model-year counterparts, which means that there are simply more late-model compact and midsize cars returning to auction this year,” he added.

Banks gave the example of the Ford Focus.  AuctionNet sales for the 2012 model have exceeded 11,600 units this year, a 217-percent year-over-year increase.  What’s more, 28 percent of compact car sales at auction this year have involved a 2012 Focus, Banks added.

In the midsize car category, he noted that some of the top-selling models have seen their 2012 model-year volume increase as well, citing the Ford Fusion (up 32 percent), Honda Accord (up 61 percent) and the Nissan Altima (up 32 percent).

That said, “these were all redesigned for the ’13 model-year and it isn’t uncommon to keep a large percentage of new units in rental fleets for an outgoing design,” Banks noted.

“What is somewhat surprising is the 59-percent increase in ’12 model-year Toyota Camry volume, as this was a redesign year for the car,” he continued. “Per R.L. Polk data, the Camry’s rental penetration rate did fall for the 2012 model-year, from 14.8 percent in 2011 to 12.7 percent, but it was more than two times higher than the 5.2-percent penetration rate carried in the first year of the previous design (2007).”

On the opposite end of the price movement spectrum, large pickups (down 0.1 percent) and large SUVs (down 0.2 percent) had the most modest month-over-month price decline, thanks to high demand and low supply.

Moreover, their year-to-date gains (7.3 percent for large pickups; 7.5 percent for large SUVs) are significantly higher than the rest of the industry.

“Relative to last year, prices for the two segments have grown by a combined average of 7.4 percent, or more than four times the 1.7-percent increase achieved by the third-best performing segment, midsize vans,” Banks noted.

In a similar finding, Black Book noticed that full-size pickup prices fell just 5.4 percent from a year ago, representing the “best annual depreciation level” in its data set.

Most other segments depreciated between 10 percent and 20 percent. On a month-over-month basis, the greatest increase in Black Book’s data set was for compact SUV prices, which were up 0.9 percent.

Elsewhere in the Guidelines report, NADA found compact utility prices were down 1.8 percent month-over-month in May and also were down 1.8 percent year-to-date.

Luxury cars dipped 1.3 percent sequentially in May, with year-to-date prices down 1.8 percent.  Luxury utility prices were off 1.6 percent month-over-month and fell 2.1 percent year-to-date.

Prices for midsize utilities dropped 1.9 percent from April to May, but climbed 1.3 percent year-to-date through May.
Midsize van prices were down 1.4 percent during the month; year-to-date, they had climbed 1.7 percent.

The average month-over-month price change for the market in May was a downturn of 2.1 percent; through five months, prices are down 0.1 percent.
 

Joe Overby can be reached at joverby@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.