While noticing that March wholesale prices rebounded by 1.6 percent, the team at NADA Used Car Guide, a division of J.D. Power, is expecting the market to give back much of that gain in April.

According to the latest issue of Guidelines released on Tuesday, NADA UCG indicated that prices of vehicles up to eight years in age are expected to decline by approximately 1 percent in April. Analysts explained that mainstream car depreciation is expected to be less than last year as compensation for February’s depressed result.

“Conversely, SUV and truck depreciation is expected to be slightly worse due to ongoing increases in supply,” the report said. “Premium segment losses are forecasted to average less than 1 percent, which is about a 0.5-point improvement from April 2016.”

Looking out further, NADA UCG projected that prices are expected to fall by about 2 percent in both May and June before prices deteriorate “slightly more” in the summer and early fall months.

The report went on to mention the overall forecast for the year remains unchanged. Analysts said prices are still expected to decline by about 6 percent in 2017, which is two points worse than the 4 percent softening they noticed a year ago.

More details about March price movement

After declining by an unexpected 1.4 percent in February, NADA UCG reiterated wholesale prices of used vehicles up to eight years old bounced back in March.

Analysts acknowledged this March’s 1.6-percent lift in prices “wasn’t quite as big as anticipated, it was directionally right in line with the period’s 2.3 percent average over the previous three years.”

NADA Used Car Guide’s seasonally adjusted used-vehicle price index fell for the ninth straight month, declining a slight 0.3 percent from February to 110.1 in March. Even though the decline was described as “mild,” the report noted March’s index figure was 7.2 percent below the reading on March of last year, which was 118.6.

The latest reading also marked the index’s lowest level since September 2010.

“March’s recovery in used-vehicle prices can be credited to typical spring season increases, which hinge largely on federal tax refunds,” the report said.

“In March’s edition of Guidelines, we pointed out the negative effect of new laws involving the Internal Revenue Service (IRS),” analysts continued. “Essentially, the laws require the tax agency to withhold all refunds that claim the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until mid-February.

“As a result of meeting this new process, the delay of tax refunds decreased the amount of vehicle purchases for the month, effectively depressing vehicle prices,” they went on to say.

While the number of tax refunds issued continue to lag last year’s figures, NADA UCG pointed out the situation improved significantly in March. Per the IRS, the total number of refunds issued through March 24 was still 3.4 percent lower than the same period in 2016.

While the total number of refunds was down for the year, the amount issued improved by 7.6 percentage points compared to what was reported through Feb. 24, according to IRS information.

Additionally, the IRS data showed the average refund paid out through March 24 reached $2,897, an amount 1.1 percent higher than the same period in 2016.

Larry Dixon, executive analyst at J.D. Power Valuation Services, elaborated about the impact of tax season in a video available here as well as at the top of this page.

The latest installment of Guidelines also highlighted that mainstream used-vehicle segments recovered from February’s unusually soft performance with prices up virtually across the board.

Normal for the period, NADA UCG found that segment level prices in March were especially strong for non-luxury small and mid-size cars.

“Consumers shopping for vehicles in these segments were finally armed with fresh disposable income thanks to their recently acquired tax refunds, which logically played a role in increasing used-vehicle demand over the month,” analysts said.

After declining by 2.1 percent in February, the report showed subcompact car prices rebounded by 3.4 percent, which was the most of any segment for the month.

Analysts added that prices for compact and midsize cars trailed further behind, but still increased by 2.6 percent, respectively.

Matching the industry average, NADA UCG pointed out that midsize van prices jumped by 1.6 percent, followed closely by the large car segment’s 1.5 percent increase.

Remaining non-luxury segment prices increased between 0.6 percent (large pickup) to 1.4 percent (mid-size utility), according to the report, which also stated large utility vehicle prices were flat for the month.

Closing out that monthly update, NADA UCG found that luxury vehicles fared far worse in March than their non-luxury counterparts. As a result, the report showed four out of six luxury segments experienced price losses for the period.

Analysts said declines were the most severe for luxury large utility and luxury large cars. Prices for the two fell by 1.5 percent and 1.4 percent, respectively.

The report also mentioned luxury midsize and luxury compact car declines reached 0.8 percent and 0.7 percent. Meanwhile, luxury compact and luxury mid-size utility prices ticked up by 0.2 percent and 0.3 percent, respectively.

“Overall, luxury segment losses were more severe than what has occurred during March over the past few years,” the report said.