Wholesale prices of vehicles up to 8 years old fell by 2.3 percent in July compared to June, tying June for the biggest monthly drop thus far in 2016.
Perhaps not unsurprisingly, losses were steeper for cars than for trucks.
“Price movement at the segment level followed the trend we’ve witnessed the past few months where car losses were greater than trucks,” Jonathan Banks, executive analyst at NADA Used Car Guide, said in the latest Guidelines report.
“Used subcompact car prices fell by an average of 3.9 percent ($371). That’s the largest segment decline this past month," Banks continued.
While that segment’s loss was July’s largest in the industry, it matched the month’s previous three-year average.
Losses for midsize and compact cars were once again larger than the industry average, but typical for the period, NADA UCG noted. Depreciation for those segments reached an average of 2.9 percent, almost in line with last July’s 3 percent decline. Large-car depreciation also was slightly worse than the industry average at 2.5 percent, but better than last year’s 2.8 percent decline.
That being said, large utility and large pickup truck prices showed strength. Prices for those segments fell by 0.3 percent and 0.5 percent, respectively. These figures align with the segments’ previous three-year combined average decline of 0.4 percent.
Prices for other mainstream truck and utility segments were strong, except for midsize vans; prices for that segment fell by 2.7 percent.
Midsize pickup prices slipped by 1.4 percent, while compact and midsize utility prices declined by 1.7 percent and 1.8 percent, respectively.
Luxury segment losses were mixed in July. Small luxury vehicles saw greater losses than midsize and large luxury vehicles for the month. Luxury compact utility prices declined by 3.1 percent, the most of any luxury segment, followed by compact car prices, which fell by 2.7 percent.
As a result of July activity, NADA Used Car Guide’s seasonally adjusted used vehicle price index fell by 1.3 percent to 118.9.
What’s happened year to date
Through July, NADA Used Car Guide’s used-vehicle price index stood 3.6 percent below 2015’s seven-month average. In depreciation terms, used-vehicle prices were 12.5 percent lower through July relative to all of 2015. Last year, depreciation reached a lesser 9.6 percent over the same period.
Subcompact car prices fell the most during the first seven months of this year, dropping by an average of almost 20 percent.
Truck and utility losses were milder, with large pickup prices down less than 7 percent through July, and large utility and midsize pickup prices off by a tamer 5.7 percent and 6.3 percent, respectively.
Depreciation expected to pick up
NADA Used Car Guide’s August forecast has prices of vehicles up to 8 years old falling by 2.5 percent to 3 percent when compared to July. This expected drop is about a half- to one point greater than the 2 percent decline averaged for last August.
Subcompacts are expected to drop by about 3 percent, while compact, midsize and large-car prices should fall by an average of 2.7 percent — similar to last August.
Compact utility and midsize utility depreciation is expected to reach 2.3 percent, while midsize van prices are expected to fall by 2.7 percent. Large pickup and large utility prices should decline by up to 1.8 percent, while luxury segment losses (both car and truck) are expected to average 2.5 percent.
Heading into fall, NADA Used Car Guide predicted depreciation will accelerate as the market enters that is traditionally the softest part of the year. Prices in September and October are expected to fall by about 3.2 percent and 3.7 percent per month.
NADA Used Car Guide’s full-year forecast has prices down by an average of less than 5 percent on an index basis from 2015.