Analysts are predicting a larger flow of off-lease vehicles in the second half of the year to push down auction prices, but in June and for the whole first half of 2014, wholesale prices remained strong.

According to the latest NADA Guidelines report, consumer demand for used and new cars was high last month, leaving NADA’s seasonally adjusted used-vehicle price index consistent with May results.

Though used prices normally begin dropping in June as the industry approaches the summer slowdown, the index sat at 126.4 for the month, down a slight 0.1 percent from May’s record high of 126.5.

NADA UCG senior director of vehicle analysis and analytics Jonathan Banks did point out, though, the prices of used vehicles up to 8 years old fell by 2.4 percent compared to May.

“Depreciation across segments followed a familiar pattern as of late, where declines for subcompact and mid-size cars overshadowed the overall market average, while losses for large pickups and SUVs were below the industry mean,” Banks stated, illustrating the rate of decline among the segments NADA tracks.

Subcompact and midsize cars saw prices fall the most last month on the non-luxury side of the market, with prices for the two collectively falling by 3.1 percent.

This continued a trend of heavy price dips for these segments. Banks pointed out over the last three months, prices for these two car segments have dropped by an average of 6.7 percent, which equates to almost as much as the two saw prices rise during the first quarter.

Luxury vehicles also experienced a big hit this past month. Luxury midsize and luxury large cars saw prices fall in June by 3.5 percent and 3.2 percent, respectively.

On the other hand, large pickups and SUVs continued to out-perform the industry, with a combined average decline of slightly over 1 percent, Banks reported.

In a recent video interview, Black Book editorial director Ricky Beggs asked ADESA chief economist Tom Kontos for his take on why truck prices have experienced such strong price retention.

Kontos cited a few factors, such as more younger, lower mileage trucks flowing into the lanes, as well as construction rates, and more.

For more analysis from Kontos on auction price trends, see the following Auto Remarketing story:

Video: Kontos Talks Used Supply, Truck Strength & Recon

Where Prices Are Headed This Month

Banks pointed out NADA’s predictions for July and August when it comes to where auction prices are headed have changed slightly from the June edition of Guidelines.

NADA expects wholesale prices to fall by a slower rate of approximately 1 percent in July. Once again, the trucks are expected to see stronger price retention than cars, “especially on luxury models,” said Banks.

Car prices are expected to fall by over the 1 percent industry average, while large pickups and SUVs will most likely see prices remain flat-to-up slightly, according to the report.

That said, as we head closer to fall, depreciation is expected to pick up.

“Per the seasonal norm, depreciation is forecast to pick up to a range of 1.5-2 percent in August before increasing to an average of roughly 2.5 percent in September,” Banks stated.

A Strong First Half

Overall, wholesale prices for the first half of the year were much higher than the same period of 2013, Banks pointed out.

Consequently, auction prices are up 2.8 percent higher than seen during the same period last year.

Breaking the numbers down by segment, prices for large pickups are up almost 12 percent. Offering a comparison, prices for smaller cars “haven’t performed nearly as well,” said Banks.

For example subcompacts are down by 1.6 percent compared to last year.

The luxury car segment has also taken a hit, as prices are down 5.1 percent for luxury large cars.

Banks reported this drop is the largest out of any segment so far this year.

And though prices remain up for the year, analysts are predicting an influx of off-lease vehicles flowing into the lanes will put downward pressure on prices in the lanes during the second half.

Manheim chief economist Tom Webb said in a recent conference call that although off-lease volume grew at a steady pace at auction so far in 2014, Manheim expects this rate to pick up even more during the second half of the year.

“They (off-lease volumes) are continuing to grow — we expected the increases in the back half of this year would be more than the first half, and that is the case,” said Webb, chief economist at Manheim Consulting. “Certainly the off-lease volume is tracking along with expectations. The percentage of those that end up in a traditional auction process is pretty much in line with expectations, as well.”

For more on predicted off-lease trends for the second half of the year, see the following Auto Remarketing story:

Off-Lease Volume to Get Boost in Second Half