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J.D. Power: June a ‘Relatively Average’ Month for Wholesale Prices

The 2.2% decline in wholesale prices of vehicles up to eight years in age was right in line with average losses recorded for the month over the past five years, J.D. Power Valuation Services reported this week. However, the firm’s Seasonally Adjusted Used Vehicle Price Index was significantly lower than a year ago.

by Staff
July 19, 2017
J.D. Power: June a ‘Relatively Average’ Month for Wholesale Prices

 

4 min to read


MCLEAN, Va. — June was an average month in terms of wholesale prices, according to J.D. Power Valuation Services. It reported this week that wholesale prices of used vehicle up to eight years in age fell 2.2%, which in line with the 2.2% average losses recorded over the past five years.

The firm’s Seasonally Adjusted Used Vehicle Price Index remained unchanged at 111.1. However, in spite of the static movement, the index remains significantly lower — 7.6% lower — than where it was in 2016.

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At the segment level, mainstream car segment losses led the industry in June, with subcompact, compact, mid-size, and large cars registering price declines between 3.2% and 3.4%. At the top of that range were large cars, which recorded the largest loss among all segments (down 3.4%).

“Large cars have not experienced a loss of this magnitude in June since 2001’s 3.7% decline,” the firm stated in the June edition of its “Used Car and Light Truck Guidelines” report. “Looking back, the segment’s five-year average was a lesser 2.6% for the period.”

Most of the large car segment’s makes and models had a fairly average performance in June. However, 2010 to 2013 Chrysler 300 and Dodge Charger vehicles recorded sharp price declines (as high as 75 for the 2010 Charger), and account for a sizable portion of the segment’s overall monthly volume.

Subcompacts (down 3.2%) and compacts (down 3.3%) also registered sizable losses, although the declines weren’t outside their historical norms. “For example, over the past five years, small cars experienced 3% depreciation while mid-size cars averaged 3.1%,” the firm noted.

Mainstream utility losses were scatted in June. Mid-size utilizes averaged a 1.5% loss, while compact utility prices declined 2.2%. Mid-size van prices declined less than 1% for the month.

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Large and mid-size pickups continued their run of wholesale price dominance, with their wholesale prices growing 0.1% and 0.2%, respectively. “Over the past five years, pickup prices have performed well compared to the rest of the industry, on average,” the firm stated in its report. “That stated, prices typically declined slightly during the period. While sales were strong across the board in the mid-size pickup group, 2015 Chevrolet prices were exceptionally strong and increased by an average of just below 3%.”

On the luxury side, all premium segments outperformed the overall industry average in June. Luxury mid-size utilities experience their biggest loss so far in 2017, down by an average of 2.1%. “However, the segment’s loss was nearly identical to the group’s five-year June 2% average decline,” the firm noted. “Remaining luxury segments performed slightly better as losses ranged between 1.2% for luxury large cars to 1.8% for luxury mid-size cars.”

As for June auction trends, sales volumes of models up to eight years in age fell by 4.7% from May, reaching 373,188 units in June. Last June, vehicle volume for the age group only reached 350,603 units.

Late-model vehicle volume, or units up to three years in age, reached 244,116 in June, which was 5.7% lower than May’s 258,803 units. Late-model volume sits at 1.46 million units through the first half of 2017, which is 7.9% higher than a year ago, according to the firm.

At the segment level, late-model midsize pickup volume was up 3.2% from May, while mid-size van volume increased 1.2%. On the opposite end of the spectrum, large car volume fell the most in June and was down a significant 22.4%. The drop puts the segment’s yearly tally 10.6% below the same period in 2016. On a month-over-month basis, volume was for most of the other segments.

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“Through the first half of 2017, late-model mid-size car volume reached 297,291 units and accounted for the lion’s share of industry volume,” the firm noted. “The group’s yearly tally was 4.5% greater than the first half of 2016.”

Late-model compact utilities have also account for a significant amount of total industry volume in 2017. The group’s share reached 218,094 units through June, which is 28.2% greater than the same period in 2016.

Look ahead, the firm expects wholesale prices of vehicles up to eight years in age to decline by approximately 2% in July on a month-over-month basis. On a year-over-year basis, July is expected to perform slightly better than the 2.2% drop observed in July 2016.

“At the segment level, mainstream losses are expected to be relatively consistent across the board,” the firm stated in its report. “Mid-size and large pickups continue to perform very well and are forecast to outperform the industry average. Losses for all premium segments are forecast to fall by slightly more than the industry average for the month.”

In terms of full-year expectations, used prices are expected to decline by about 6% in 2017, about two points worse than 2016% 4% loss. “Ongoing increases in supply, higher incentives, and a normalizing retail environment — including credit conditions — will ultimately dictate losses,” the firm noted.

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