While also revisiting its outlook for the rest of 2019, J.D. Power Valuation Services looked back at the pair of challenges the used-vehicle industry encountered in January and the resulting impact on wholesale prices and more.
According to the latest installment of Guidelines, the J.D. Power Valuation Services’ Seasonally Adjusted Used Vehicle Price Index declined by 2.7 points in January relative to December to land at 117.2.
Despite the index’s sharp decline, the reading currently sits 2.3 percent above the year-ago level.
“The used-vehicle market slowed once again in January, marking the fifth consecutive month of decline,” analysts said in the newest Guidelines. “While January results are typically flat to down slightly, this year’s performance was significantly weaker because of weather related challenges resulting from the polar vortex as well as the government shutdown which lasted 35 days.
“Millions of people were affected because of these events, potentially disrupting both new- and used-vehicle purchases during the period,” analysts added.
In non-index terms, J.D. Power Valuation Services determined wholesale prices of used vehicles up to 8 years old fell by 2.5 percent in January versus December. Analysts discovered January’s performance was the worst result in the past 10 years.
“It was expected that used prices would decline by around half a percent mirroring results of the past several years. However things were significantly worse due to weather and government related challenges,” the firm said in the report.
Looking at the mainstream segment of vehicles, J.D. Power Valuation Services noticed that declines were consistent across the board except for large utilities, which recorded a small 0.5-percent lift in prices.
Bucking their recent trend, analysts pointed out that subcompact, compact and midsize passenger car losses were some of the largest on the non-premium side of the market as the declines ranged between 1.5 percent and 2.7 percent.
On to the premium side of the market, J.D. Power Valuation Services found that averages decreases came in greater than their mainstream counterparts, falling within a range of 3 percent to 3.7 percent.
Luxury large car losses reached only half a percent, but the overall size of this segment is extremely small; any material change in any one model really shifts overall results,” analysts added.
In terms of full-year expectations, J.D. Power Valuation Services projected the used market is expected to slow in 2019 with wholesale prices expected to decline by about 1 percent to 1.5 percent.
“There should be increases in used supply once again this year along with more volatile credit conditions and increasing gasoline prices which are expected to apply downward pressure on the used side of the market,” analysts said in the report.
“Labor conditions are expected to have a neutral impact, while solid home prices and overall consumer appetite for used cars, which is supported by increases in equipment as well as more advanced safety and technology features, will help to balance out but not overweigh the anticipated negatives for the year,” analysts went on to say.