The month-over-month decline in wholesale prices during July was moderately less steep than anticipated, according to NADA Used Car Guide, which attributed this particular trend to hearty truck demand making up for soft car segment values.

Overall, AuctionNet prices were down 2.0 percent from June, which was “slightly better than expected,” explained senior analyst Jonathan Banks in the latest Guidelines report.

A backdrop to this movement was the declining price at the pump, which Banks said has affected compact cars and midsize cars the most.

Gas prices have fallen for three months, including a $0.10-per-gallon drop in July, he noted, and this has led to softer prices for compact and midsize cars.
In July, those segments saw  their prices dip 2.9 percent month-over-month, the analysis points out.

And in the months following the gas price peak of $3.90 per gallon back in April, there has been a 10.2-percent price drop for compacts and a 9-percent downturn for midsize cars.

“In dollar terms, this equates to a loss of nearly $1,300 for each segment,” Banks noted.

“Conversely, the monthly improvement in pump prices helped to minimize price declines for truck segments in July, although large SUVs were a notable exception to this,” he continued.

In fact, prices for large SUVs were off 3 percent in July, in contrast to the declines in other truck segments, which were more moderate.

Specifically, midsize utility vehicles were down 0.7 percent from June, as were midsize vans. Large pickup prices dropped 0.8 percent, and compact utility prices fell 1.7 percent. The downturns for these four were significantly less steep than prior months, Banks said.

But the large SUV trending comes with a caveat.

“While large SUV losses were a more substantial 3.0 percent, this result should be viewed with a bit of skepticism because it is based on very low volume,” Banks explained. “Since overall volume for the segment remains extremely thin, inconsistencies in individual vehicle characteristics, e.g. optional equipment and condition, play a larger role in influencing average prices.

“When looking at data over the span of the past few months, price movement is similar to that of the large pickup segment,” he added. “Having said that, new vehicle supply for the segment remains at a relatively high level and incentives have jumped by 24 percent over the past three months. These facts indicate that there is a certain degree of legitimacy in the month’s drop.”

Moving over to the luxury market, there was a 2-percent drop in the values of luxury cars. However, this was less sharp of a drop than for compact cars or midsize cars.

Banks said, “This is this is a good example of the luxury sector’s reduced sensitivity to changes in gasoline prices. Losses were a bit steeper for luxury utilities at 2.7 percent, but this was in line with expectations for the period.”

Year-Over-Year Trends

Compared to July 2011, AuctionNet prices were down 2.5 percent last month.

“On an annual basis, market prices remained below last year’s average by 2.5 percent, but as we stated in last month’s edition of Guidelines, this is a due more to last summer’s Japan-induced price inflation rather than deteriorating market conditions this year,” Banks said.

The most significant year-over-year decline was in the midsize car segment (down 6.6 percent), followed by the compact utility category (down 5.2 percent). Compact car prices fell 4.3 percent from July 2011. Midsize vans showed a 3.6-percent downturn.

Luxury car prices fell 3.8 percent, and luxury utility prices dipped 1.9 percent.

Conversely, large pickups had the greatest year-over-year price increase (up 7.6 percent), with the midsize utility segment next at 4.1 percent. Large SUVs (up 1.1 percent) also showed an increase in value.