McLEAN, Va. -

Even after Hurricane Sandy hit, damages from which are expected to push used-vehicle prices up, wholesale prices experienced a steep decline in October, according to NADA Used Car Guide’s Guidelines report. But the wholesale volume fallout from the storm is expected to spur a price hike in the near future.

October’s report shared that at 2.3 percent, AuctionNet wholesale prices experienced a steeper month-over-month decline in October than the 2.0 percent average fall that had been observed over the previous three months.

“But the downward movement was slightly better than what is typically seen over the month and was a significant improvement over the 4 percent drop recorded in October 2011,” officials shared.

Though all segments experienced drops, some had more dramatic drops than others, bucking the market average.

Once again, midsize car and midsize van depreciation — at 3.9 percent and 3.7 percent, respectively — “checked in” at the top of this list, officials shared.

Moreover, gas prices continue to fall, and the compact car loss of 3.0 percent matched September’s decline.

“Unlike in previous few months, the largest declines for most segments were concentrated in model years prior to 2012. This is not unusual for the season as growing volume from the most recent model year tends to dictate a realignment of prices across previous years,” NADA UCG officials shared.

Breaking down more of the numbers, losses for truck segments were “generally on par with the market average yet again.”

In fact, large pickup prices fell by 2.8 percent, more than double the 1.2 percent decrease recorded in the previous month. Declines for other truck segments ranged between 2.0 percent for large SUVs, to 2.6 percent for compact and midsize utilities, according to the report.
 
On the highline side, luxury car depreciation matched the market average at 2.3 percent, while the luxury truck fall of 1.9 percent was about one-half point better.

“October marked the third month in a row where combined luxury segment depreciation outperformed the market at large, which indicates that demand for clean, late-model luxury units, a substantial number of which will be certified under manufacturer programs, is keeping pace with the steadily increasing volume of three-year-old off-lease units returning to the used market,” officials explained.

The Impact of Hurricane Sandy on Wholesale Volume

And though wholesale prices were down in October, after Hurricane Sandy hit, volume fell off, as well. As a result, the industry may see prices rising in the near future.

Highlighting October’s wholesale volume trends, overall AuctionNet volume over the four weeks prior to the week of Oct. 29 when Hurricane Sandy made landfall on the East Coast was down by an average of 5.4 percent relative to the previous four-week period, NADA UCG reported.

And when the last week of October is factored in, volume fell off by 10.9 percent.

And the impact of the storm in the Eastern and New England regions was even more dramatic, with wholesale volume cut by more than half during the last week of October, compared to the week prior.

Price Expectations After Storm

NADA UCG also revealed its predictions for November.

Before the storm hit, NADA was expecting its used price index to fall by a 0.5 percent in November before increasing by a slight 0.3 percent in December on an over-the-month basis.

“Now (after the storm) NADA expects that the loss of used-vehicle supply and the increase in replacement demand due to Sandy will see used vehicle prices improve, and that the bulk of purchases both postponed and stimulated by the storm will be recouped towards the latter half of November and through December after damage has been fully assessed and insurance settlements have been made,” officials said.

That said, NADA predicted that used-vehicle prices would outperform pre-Sandy expectations in December by between 0.5 percent-to-1.5 percent at a national level, with the degree of improvement determined primarily by the number of units that are damaged and removed from operation.