McLEAN, Va. — After falling for the third straight month in September, auction prices were expected to continue their downward trend last month.
In September, wholesale prices of vehicles up to 8 years in age fell by 3.6 percent from August, according to NADA Used Car Guide’s October Guidelines
report.
This decline was well above the 2.8 percent average decline for the month over the course of the last two years.
And seasonality was predicted to rear its head, making October one of the weakest months of the year for used prices, “especially given the above average losses witnessed over the past few months,” NADA’s Jonathan Banks said in the report.
Auction prices were expected to drop between 3.1 percent and 3.6 percent in October when compared to September, according to NADA.
In 2013, used prices fell by 3.6 percent in October, showing similar year-over-year trends.
Similar to trends seen in September, price declines for last month were expected to be the heaviest for the luxury car, luxury utility and midsize vans segments.
Subcompact, compact and midsize car depreciation should continue to be above average as well, the report stated.
For September, the subcompact compact and midsize car segments saw prices fall by 3.6 percent, 3.9 percent and 3.7 percent, respectively.
In October, midsize and large pickups were expected to tout the strongest price retention, while depreciation for remaining segments were expected to revolve around the industry average, according to NADA.
Prices were on a downward trajectory even before fall arrived. In fact, combined, the rate of depreciation over the past three months ended up marking the weakest third quarter for used prices observed since 2002.
In September, NADA’s seasonally adjusted used-vehicle price index fell down to 121.4 from August’s 122.7.
Interestingly, even though prices have been falling at a more rapid pace in the second half of the year, prices year-to-date remain 1.6 percent higher than the same period of last year.
This is due in part to the large pickup segments. Prices for this segment sit 10.2 percent higher than the same period of last year.
Prices for large SUVs, midsize vans and midsize utilities have grown by 3.5 percent to 4.7 percent, while compact and midsize car prices are on average 2.6 percent higher.
NADA predicts prices will fall 2.5 percent in November before falling back to a rate of 1 percent to 1.5 percent depreciation in December to finish out the year.
Auction Prices Fall for 5th Consecutive Month
In a similar analysis, the Kontos Kommentary report indicated that September marked the fifth month in a row auction prices fell.
According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, wholesale prices in September fell by 0.4 percent to an average price of $9,557.
Though dropping a bit from August, this number actually marks a 0.8-percent increase from September 2013.
“September’s modest year-over-year increase in average prices reflects a higher percentage of institutional sales of late-model vehicles this year versus last, and therefore, masks the softness in prices seen by looking at those sales on a disaggregated basis,” ADESA’s Tom Kontos explained in the report.
“Improved retail sales of used vehicles after a tough summer cushioned the blow to wholesale prices from growing supply,” he added.
In the auction lanes in September, prices for vehicle remarketed by manufacturers saw the biggest hit, falling by 4.2 percent from August and down 3.3 percent year-over-year. Kontos pointed out manufacturers were busy in September selling off elevated program vehicle inventories.
Prices for fleet/lease consignors were up next, down 2.0 percent sequentially and down 1.1 percent year-over-year.
Dealer consignors saw a 1.9-percent average price decrease versus August. That said, this is up 0.3 percent from September 2013.
Taking at a look at the individual segments, prices for minivans bucked the trend and rose significantly in September, with prices increasing by 15.6 percent from August and 7.1 percent year-over-year, to rest at an average price of $7,082.
Kontos says this bump in price “reflects an increase in the percentage of current and 1-year-old models sold in factory sales in September.”
Source: http://www.autoremarketing.com/wholesale/q3-is-weakest-for-used-car-prices-since-2002