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Black Book: Smaller Cars Back in Demand

January 10, 2017

LAWRENCEVILLE, Ga. — Small cars are making a comeback to open the year, and Black Book believes the segment could be in for a good spring.

Model-year 2008-2014 subcompact, compact and mid-size cars showed the lowest depreciation last week, with their wholesale values declining 0.23%, 0.26, and 0.25%, respectively.

“Smaller cars are back in demand at the start of the new year,” said Anil Goyal, senior vice president of automotive valuation and analytics for Black Book. “We expect a good spring season this year for such vehicles.”

Volume weighted, overall car segment values decreased by 0.45% last week, lower than the average depreciation rate of 0.56% recorded during the previous four weeks. Showing the biggest declines last week were the sport car, luxury car, premium sport car and prestige luxury car segments, which decline by 0.87%, 0.72%, 0.72%, and 0.71%, respectively.

“Sporty cars show higher declines due to seasonality,” Goyal noted.

Volume weighted, overall truck segment values, including pickups, SUVs and vans, decreased by 0.51% last week, which was in line with the average depreciation rate of 0.51% recorded during the previous four weeks. The subcompact crossover, full-size crossover, and midsize crossover segments declined the most, falling 1.36%, 0.88%, and 0.85%, respectively.

Additionally, retention trends for three-year-old compact crossover/SUVs have been strong recently, the firm noted in its monthly report. “Relatively, the supply will be higher this year along with more competition from new-vehicle incentives,” the firm stated in its report. “We expect this strong retention to soften this year, which is reflected in our residual forecasts.”

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