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IRVINE, Calif. — Overall, used-vehicle values were essentially static in July, but the wholesale values of late-model luxury units have softened from 2010 model-year units moving into the wholesale market, according to Kelley Blue Book.

The company's latest Blue Book Market Report points out used values climbed 0.2 percent in July. But when looking at segments whose values fell, the softening has been more pronounced on the luxury side.

For instance, luxury crossover values dipped 1.7 percent and luxury cars declined 1.5 percent. Officials noted that values for 2008- and 2009-model-year vehicles have fallen to make way for the 2010 units.

"While this is common in most segments, this phenomenon is more pronounced this year in the luxury segment due to the luxury buyer's preference for the latest and greatest model," shared Juan Flores, KBB's director of vehicle valuations. "With fresh luxury vehicles appearing at auctions, demand is skirting away from two- and three-year-old vehicles, putting significant downward pressure on their values."

And as the economy is still rather soft, consumers are more likely to go for more affordable units with stronger gas mileages. In fact, many of the in-market luxury owners who are no longer considering their current brand are instead checking out the non-luxury brand at the same automaker.

For instance, Acura to Honda and Lincoln to Ford tied for the highest level (23 percent each) of in-market owners moving to the non-luxury brand. Cadillac to Chevrolet (19 percent) was next, and Lexus to Toyota (16 percent) wasn't far behind.

Looking at depreciation trends among individual luxury vehicles, the heaviest declines were found at Mercedes-Benz and BMW.

The Mercedes-Benz ML-Class was down 4.1 percent, while the automaker's CLS-Class, R-Class, GL-Class and BMW's 7 Series all fell 3 percent.

Overall, Mercedes-Benz's used values are down 1.8 percent month-over-month, and officials attribute this to 2010 model-year units hitting the auction market and the influx of lease returns of two- and three-year-old models. These trends have pushed upward on supply of Mercedes-Benz units.

That said, officials pointed out that Mercedes-Benz's used values climbed 3.5 percent on a year-over-year basis.

Residual Analysis

Among other areas of the used-vehicle market analyzed in the report, KBB also delved into residual values. The industry as a whole showed relative stability in 60-month residual values, as these dipped 0.1 percent of MSRP on a year-over-year basis.

Of the 16 segments discussed by KBB, just five showed declines in projected values, with compact cars (down 2.3 percent) having the heaviest year-over-year drop-off, followed by sports cars (down 1.8 percent) and hybrid/alternative energy cars (down 1.7 percent). 

High-performance vehicles, which softened 0.7 percent, and full-size pickups, whose predicted residuals dipped 0.4 percent, were the other two declining segments.

Looking at compact cars and sports cars in more detail, Eric Ibara, director of residual value consulting for KBB, noted: "Declines in the compact car segment are a continuation of a trend Kelley Blue Book has been forecasting for the past several months. Softness in the future value of these vehicles is due to the increased number of models entering this segment and the anticipated moderate rise in fuel prices.

"Declines in the sports car segment were primarily driven by the Nissan 370Z and Porsche's Cayman, down 5.9 percent and 5.5 percent, respectively," he added. "The Audi TT and the Infiniti G37 also fell 4.8 percent and 4.6 percent, respectively, as demand for these vehicles declines."

Conversely, the mid-size utility segment showed the strongest upswing from a year ago with a 2.3-percent climb, with full-size cars (up 2 percent), full-size utility vehicles (up 1.9 percent) and midsize pickups (up 1.9 percent) not far behind.

"The midsize utility segment gains were due largely to the Hyundai Santa Fe (up 5.3 percent), Dodge Journey (up 5.3 percent) and Jeep Liberty (up 4.7 percent), in spite of a large drop in the Hummer H3 (down 8 percent)," Ibara noted.

As far as full-size cars, this was pushed by the Chrysler 300C, whose predicted values jumped 8 percent, the Chrysler 300 (up 6.9 percent) and Ford Taurus (up 5.3 percent).

Pushing the gains in the full-size utility segment were the Mazda CX-9, which showed a 4-percent hike, and the Honda Pilot, which moved ahead 3.3 percent, according to Ibara.

He also noted that in the last year, auction pricing for the CX-9 and Pilot has been "strong."

"Lastly, mid-size pickups benefited from a higher forecast for the Nissan Frontier and Suzuki Equator, up about 3 percentage points each," Ibara concluded.