Black Book tackled predictions for depreciation and residual values along with pinpointing a variety of factors that could be either tailwinds or headwinds for the used-car market as part of its Vehicle Depreciation Report 2026 compiled in collaboration with Fitch Ratings.

Analysts see 2026 as an “inflection point” for the industry.

“Core metrics — including depreciation, retention, and incentive spending — are stabilizing, providing greater predictability for market participants,” Black Book said in the report. “However, several structural pressures remain.”

Those pressures include:

—Persistent affordability challenges
—Elevated new-vehicle pricing
—Policy and trade uncertainty
—Ongoing shifts in electrification strategy

“Together, these forces will continue to shape a market that is stable in aggregate, but increasingly uneven beneath the surface,” Black Book said. “The result is a used vehicle market that no longer behaves as a single system, but as a collection of distinct segments each responding differently to the same economic and policy environment.”

Depreciation outlook

Black Book is projecting depreciation to remain stable in 2026, with a forecasted rate of 11.9%.

“While this represents a modest improvement, it does not signal a return to pre-pandemic depreciation levels,” analysts said. “Instead, the market is expected to operate within a tighter, more stable range.”

Black Book pointed out a trio of factors supporting that range, including:

—Continued constraints on late-model used supply
—Elevated new-vehicle pricing
—Persistent affordability pressures

“As a result, depreciation is likely to remain disciplined and predictable but anchored at a structurally higher level than historical norms,” analysts said.

Expectations for residual values

Black Book indicated in the report that 3-year-old vehicle value retention is expected to reach 58.2% for 2023 model year vehicles returning in 2026, reflecting a modest year-over-year decline but continuing strength relative to historical benchmarks.

“Residual values are no longer compressing toward historical norms. They are stabilizing at a structurally higher level,” analysts said. “This pattern reinforces a broader trend: Residual values are no longer driven solely by cyclical market forces, but by structural shifts in supply, pricing, and consumer behavior.”

Looking ahead, Black Book explained that residual values are expected to remain more stable than in recent years, higher than historical norms and more sensitive to structural factors than cyclical ones.

“This creates a more predictable environment for forecasting, but not necessarily an easier one,” analysts said.

So, what should consignors and dealers watch? Black Book said market participants will need to account for:

—Slower supply recovery
—Persistent affordability constraints
—Segment-level variability in retention performance

“The result is a residual value environment that is disciplined and stable but operating within tighter constraints than the pre-pandemic market,” analysts said.

Closing thoughts

Black Book acknowledged these assessments and predictions are sending the used-car market into a more fragmented environment, with a divergence observed across segments a year ago that is expected to continue.

“Affordability-driven segments are likely to remain supported by consistent demand, while higher-priced and more discretionary segments may continue to face pressure. At the same time, electrification will remain a source of variability, as pricing, policy, and consumer adoption continue to evolve,” analysts said in the report.

Black Book emphasized this fragmentation reinforces the importance of:

—Segment-specific analysis
—Targeted inventory strategies
—Flexible pricing approaches