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NADAUCG: May's Used-Vehicle Price Index Rises for First Time This Year

June 22, 2016

TYSONS, Va. — Wholesale prices for cars eight years or older fell by 2% in May, according to June’s NADA Used Car Guide. The report stated that the price for used mainstream cars continued to fall at industry-high rates in May. However, it added that May’s overall performance was better than expected.

The report noted that the 2% drop in used-vehicle prices was better than the 2.7% drop recorded for the month over the past four years. Due to this improvement, the NADA Used Car Guide’s seasonally adjusted used-vehicle price index rose for the first time this year by 0.7% to 119.1.

“When compared to the same period in 2015 on an index basis year to date, average prices this year are down by about 4%. Through the first five months of the year, depreciation has accelerated at a steeper rate for small to mid-size cars, as well as small and mid-size utilities. Vehicles in the large car, truck, SUV and luxury segments have fared better,” the report stated.

The best performing segments for the month were mid-size and large pickup trucks by a large margin. Prices for the two segments fell by a combined average of 0.4% during the month, a slight improvement over the previous month’s drop of 0.6%.

Mid-size vans also fared well. The segment saw prices fall less than 1% in May, marking an approximate 1.5% improvement over the last two years.

Luxury vehicle prices performed better than the rest of the mainstream segments, the report stated. Luxury CUV prices saw the steepest fall with a 2.1% drop in price. The rest of the luxury segments averaged a 1.2% drop, according to the report.

Compact car prices suffered the biggest dip, with prices for the segment falling 3% in May. Large and mid-size cars followed closely behind with a 2.7% price dip, while subcompacts saw prices fall by 2.4%. Subcompact prices could have been worse, the report stated, but a “17% pullback in late-model auction sales volume over the month” helped performance.

Even the much sought-after CUV segment experience above-average depreciation in May, according to the report. The report cited a growing pool of supply and higher new-vehicle incentives for the segment’s price drop of 2.5%.

On a year-to-date basis, CUV depreciation is nearly 5% worse compared to the fourth quarter of 2015. CUVs are now tied with subcompacts and compact cars for the biggest negative swing in the industry, the report stated.

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