MCLEAN, Va. — Strong seasonal demand for new and used vehicles in May not only pushed the new-vehicle annual sales rate to a seven-year high, it lifted the National Automobile Dealers Association’s used-vehicle price index to a new high of 126.8. This was 0.5% better than the previous record set a month earlier.
According to the May edition of the NADA Used Car Guide’s Guidelines report, May prices for used vehicles up to eight years in age fell 2.2% from the month prior, an outcome that was slightly better than what has historically happened in the month of May.
“Depreciation across segments followed a pattern closely resembling what was observed for the period in 2011 and 2012, where declines for small and mid-size cars exceeded the overall market average, while losses for other segments were at or below the industry mean,” the NADA Used Car Guide’s report stated.
Collectively, subcompact, compact and mid-size car prices tumbled by 2.8% in May. And over the past two months, prices for the three segments have fallen by an average of nearly 4%, or half of what the trio gained over the first quarter of the year.
Luxury compact cars and large SUVs were also on the move, with prices falling 2.4% and 2.3%, respectively. “The decline in small luxury car prices wasn’t unusual; however, the month marked only the second time since early 2011 that large utility prices dropped by more than 2%,” the report pointed out. “Depreciation for remaining segments fell within the 0.5-percentage point of the industry average save large pickups, where prices slipped just 1%.”
For the first five months of the year, wholesale prices were stronger than what was recorded during the year-ago period. As a result, the NADA noted, prices on a year-to-date basis were 2.9% higher than they were through May 2013.
Leading all segment by a wide range were large pickups, with prices growing 12% from last year’s level. On a year-to-date basis, growth for large SUVs and mid-size utilities/vans has also been substantial, with prices up 7.2% and 4.7%, respectively.
“Smaller cars haven’t fared nearly as well as prices for subcompacts, falling 1.6% vs. last year. Prices for every luxury car segment are lower as well and the nearly 5% loss for luxury large cars is the most in the industry,” the NADA stated.
The NADA noted that price changes through February adhered to its forecast before a combination of pent-up demand and restrained supply due to the severe winter weather drove prices well above expectations in March. “Over the past two months, however, prices have steadily realigned with the NADA’s predicted path such that the average different between April’s and May’s forecast and actual outcome was just over 0.7-percentage point, substantially better than March’s discrepancy of nearly four points,” the NADA stated.
“The result of the past eight weeks and the lack of any major looming threats suggest that prices will continue to track back toward an expected course moving forward,” the NADA added. “Consequently, the NADA’s forecast for the summer remains unchanged from May’s edition of Guidelines, with used-vehicle depreciation expected to fall between a range of 2%-2.5% in June and 1%-1.5% in July before accelerating to roughly 2% in August.”