With consumers looking for affordable transportation, demand for compact and midsize cars is generating enough price movement to influence overall wholesale market metrics, according to the latest installment of Guidelines from J.D. Power Valuation Services.
Analysts reported data through August that showed used-vehicle prices are 2% higher on average than during the same eight-month period in 2018. In terms of August, the used-vehicle market’s performance was also better than historic figures for the period.
As a result, the J.D. Power Valuation Services’ Seasonally Adjusted Used Vehicle Price Index for August increased by 0.7% month-over-month to 123.6.
In terms of individual segment performances, J.D. Power Valuation Services explained in the report that year-to-date mainstream passenger car price increases continue to outpace moves involving SUVs.
Analysts pointed out those more affordable small, compact and midsize car segment prices have increased the most with prices for the group rising 6.1% to 9.5%.
“Mainstream SUV segment prices have also increased, however not nearly to the same degree as passenger cars,” the firm said in the report. “One of the primary drivers behind this is the higher levels of zero- to 5-year-old SUV supply returning to the market.
“As for the luxury side of the market, premium segment prices are down across the board and are also feeling the pressure of elevated levels of wholesale volume returning to the market,” J.D. Power Valuation Services added.
In this edition of Guidelines, the firm also touched on its projection for where wholesale prices might land by the end of the year. Analysts anticipate used prices for vehicles up to 8 years in age increasing by 1% to 1.5%.
In a separate news release, J.D. Power Valuation Services executive analyst David Paris elaborated about the reasoning for firm’s forecast.
“At an industry level, used-vehicle prices are expected to remain relatively strong moving forward,” Paris said. “From where prices are currently through the remainder of the year, we are expecting a mild decline, which barring any serious weather impact or economic changes should hold true.
“Used supply will be mixed, positive for cars, negative for SUVs and trucks. The impact of other factors including gas prices, home prices, and labor conditions are is expected to be neutral-to-supportive of used prices,” he went on to say.