RVI Group examined the wholesale market in both the United States and Canada for the latest installment of the RVI Risk Outlook, spotting similar trends in both countries and comparable forecasts looking ahead toward 2020.
Beginning first in the U.S., report indicated December real used vehicle prices — seasonally adjusted for 2- to 5-year-old units — increased on a year-over-year basis. Analysts calculated that real used-vehicle prices (after adjusting for MSRP) increased by 3.5 percent in December 2018 when compared to December 2017.
On a month-over-month basis, RVI determined real used-vehicle prices decreased by 1.8 percent.
“Prices for used vehicles continue to be stronger as the economy continues to fuel consumer confidence with low unemployment and rising wages,” analysts said.
“The increasing supply of used vehicles and steady growth of incentive activity will continue to put downward pressure on used vehicle prices,” they continued. “We expect lease penetration to decline from record highs over the next three years. Thus, this supply of off-leased vehicles (record highs) will enter the market, and drive further declines in used vehicle prices.
RVI projected that used-vehicle prices are expected to decline by 3.4 percent from current levels by 2020.
“Key economic indicators signal a stable U.S. economy,” analysts said while pointing out that in the third quarter of 2018, GDP grew at an annual rate of 3.5 percent, down from 4.2 percent in the second quarter of 2018.
“The deceleration of the economy was caused by a decrease in personal consumption and exports,” analysts continued in the report.
Turning next to Canada, analysts found that real used vehicle prices in Canada also increased in December on a year-over-year basis.
RVI calculated the exchange rate decreased from November to December. The firm also noted Canadian GDP slowed in the third quarter of 2018, coming in at an annual rate of 2.0 percent, down from the 2.9 percent achieved in the second quarter of 2018.
RVI went on to mention new-vehicle sales increased slightly, with 2.1 million units (SAAR) sold in September 2018. On a year-over-year basis, real used vehicle prices increased by 8.0 percent in September.
“Looking ahead, we expect that a growing supply of off-lease vehicles in North America will put downward pressure on used vehicle prices, which are expected to decline by 6.1 percent from current levels by 2020,” analysts said.