Remember Cash for Clunkers? J.D. Power Valuation Services does, and its May wholesale vehicle price data triggered memories of that federal government program to bolster sales of new, fuel-efficient models.
Analysts shared in the latest installment of Guidelines that wholesale prices of used units up to 8 years in age declined by an average of 0.7% in May. J.D. Power Valuation Services indicated the month’s result was significantly better than the previous five-year average decline of 1.9%, producing the best May performance since 2011.
“Looking back, prices in May 2011 were bolstered by a shortage of used units resulting from depressed new-vehicle sales in 2009. Declining new-vehicle sales during this period in addition to the Car Allowance Rebate System (CARS), also known as Cash for Clunkers, created a situation where there were significantly fewer used units available in May 2011,” analysts said in the report.
The May movement meant the J.D. Power Valuation Services’ Seasonally Adjusted Used Vehicle Price Index increased by 1.2 points relative to April to land at 121.0.
Analysts added their track of used-vehicle wholesale prices now have risen for three consecutive month, leaving the May reading 1.9% higher than a year ago.
At the segment level, J.D. Power Valuation Service noticed patterns similar to April with mainstream SUV and pickup segment prices coming in as some of the strongest in the industry in May.
“Affordable mainstream passenger segments didn’t see the same strength they have in recent months, however, the outlook for these segments remains positive for the remainder of the year,” analysts said.
On the luxury side, J.D. Power Valuation Services determined May produced mixed results. However, midsize premium cars turned in their best performance for the May period since 1996.
“Prices for remaining premium segments were depressed, due in part to continuing increases in wholesale volume,” analysts said.
With Cash for Clunkers still on their mind, J.D. Power Valuation Services experts explained that stemming from March, April and to some degree May’s stronger than anticipated performances, used-vehicle prices are expected to increase in 2019 relative to 2018.
J.D. Power Valuation Services’ 2019 forecast expects used prices for vehicles up to 8 years in age to increase by approximately 0.2% to 0.7%.
“As new-vehicle prices rise, and affordability concerns increase, consumers will continue turning to used vehicles as alternatives to their new counterparts,” analysts said. “Even with increasing levels of used supply, healthy consumer appetite for used vehicles will help keep used values strong.”