MCLEAN, Va., Jan. 19, 2017 /PRNewswire/ -- A recent report by J.D. Power analysts notes December wholesale prices of vehicles up to eight years in age slowed by an average of 1.7 percent versus November. The reason for the above average slowdown? J.D. power points to higher supply and escalating incentives as the main decelerators.
As a result of the price pullbacks, analysts at J.D. Power Valuation Services—who manage the NADA Used Car Guide seasonally adjusted used vehicle price index—note the used vehicle index fell by 1.4 percent to 114 points.
The decline in prices marks the sixth month in a row the used vehicle price index dropped.
According to Jonathan Banks, vice president of vehicle analysis and analytics at J.D. Power Valuation Services, "The drop was three times worse than the average loss we've seen from 2010 to 2014 during the month of December. It was also about a percentage point higher than our Used Car Guide forecast for the month."
Which used vehicle segment lost the most value in December?
Dropping 3.6 percent from November, large utility prices suffered the biggest decline in the used vehicle market last month. Prices for the group have now fallen by an average of 3 percent per month since September, which is by far the softest four-month stretch experienced by the segment since late 2014 (segment depreciation averaged just over 1 percent through the period last year).
Which used vehicle segment lost the most value in 2016?
While depreciation grew for every segment across the board in 2016, car losses were generally much higher than trucks and utilities. Depreciation for the anemic subcompact car segment reached an industry-high 26 percent in 2016, up 6-percentage points from 2015. In other terms, the average subcompact car lost more than a quarter of its 2015 wholesale value last year. Depreciation for other car segments—both mainstream and luxury—grew from 17 percent in 2015, to 20 percent in 2016.
With all the declines in used vehicle value, did any fare better?
In absolute terms, most truck-based segments outperformed their car counterparts as mainstream truck depreciation ranged from an industry-low 8 percent (large pickups) to 16 percent (compact utilities).
What does the future hold for the used vehicle market?
Coinciding with the steady stream of tax refund checks, used vehicle prices typically improve over a given first quarter before falling off as spring progresses. Analysts at J.D. Power Valuation Services forecast the first quarter of 2017 will see prices of vehicles up to eight years old falling 1 percent versus December 2016, then improving in both February and March. Mainstream car prices are expected to increase the most through March 2017, rising by an average of 3.5 percent.
For more information and to learn how each segments in the used vehicle market performed for both December 2016 and the past year as a whole, download the free January 2017 Guidelines report.
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SOURCE J.D. Power