The team at J.D. Power Valuation Services pinpointed three reasons why used-vehicle wholesale prices through July on average came in 2.1% higher than during the same seven-month period in 2018.
In the latest edition of Guidelines, analysts attributed the factors triggering that wholesale-price growth as:
— Higher new-vehicle prices and affordability concerns
— High levels of clean late-model off-lease units entering the market
— Increased dealer demand for used vehicles
With those elements in play, the J.D. Power Valuation Services’ Seasonally Adjusted Used Vehicle Price Index for July increased by 0.6% month-over-month to 122.7.
“In terms of individual segment performances, year-to-date mainstream passenger car price increases continue outpacing their SUV counterparts,” analysts said in the report.
“More affordable small, compact and midsize car segment prices have increased the most, while mainstream SUV segment prices have also increased, however not nearly to the same degree as passenger cars,” they continued, while mentioning that one of the primary drivers behind that development is higher levels of SUVs up to 5 years old 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 Service went on to say.
In light of how prices have moved through the first seven months of the year, analysts also updated their 2019 price forecast.
J.D. Power Valuation Services’ 2019 forecast has used prices for vehicles up to 8 years in age, increasing by around 1%.
“From where prices are currently through the remainder of the year, we are expecting a mild decline, which barring any serious economic changes or a dramatic shift in new vehicle incentive strategies should hold true,” analysts said.
“Credit conditions and incentives are expected to apply additional downward pressure, while used supply will be mixed, positive for cars, negative for SUVs and trucks,” they continued. “The impact of other factors including gas prices, home prices and labor conditions are is expected to be neutral-to-supportive of used prices.”