Report: 2019 Depreciation Rate Up Sharply to 15%
Black Book and Fitch Ratings’ annual used-vehicle depreciation and auto ABS report predicts a 15% depreciation rate for U.S.-registered vehicles, up from 12.4% in 2018.
In a new report published in partnership with Fitch Ratings, Black Book analysts say a growing supply of pre-owned vehicles will push the average depreciation rate by nearly 3 percentage points in 2019.
Photo by Aleksejs Bergmanis via Pexels
LAWRENCEVILLE, Ga. — Black Book and Fitch Ratings have released the firms’ latest joint U.S. Vehicle Depreciation and Auto Asset Backed Securities report. Black Book analysts forecast an annual depreciation rate of 15% in 2019 as the supply of used cars and trucks increases, up from a “noticeably strong” 12.4% depreciation rate in 2018.
Prime auto ABS asset performance slowed in 2018 coming off peak 2017 levels, but ABS loss rates remain comfortably within Fitch’s initial expectations, analysts said, predicting stable ABS performance in 2019 driven by healthy macro conditions and auto industry fundamentals — despite the predicted increase in depreciation rates and marginally higher ABS losses.
The demand for used vehicles peaked in 2018 due to a confluence of favorable factors: low interest rates, excellent credit availability with lower delinquencies, extremely high job growth, tax cuts enabling both consumers and commercial buyers to upgrade, increased marketing of off-lease vehicles, and disciplined incentives on new vehicles, coupled with rising transaction prices, according to the report.
“While the economy is expected to continue to expand in 2019, overall demand for cars and trucks may normalize,” said Anil Goyal, executive vice president of operations at Black Book. “In addition, we expect sustained high levels of supply of used vehicles in the market. As such, we are forecasting overall depreciation to rise in 2019.”
To read the Black Book-Fitch report in its entirety, click here.
More Auto Finance
Dealerships Are Paying the Price for Extended Car Loans
Growing negative-equity scenarios mean such lengthy terms should be addressed in a forward-looking way to make them work for the dealer and the consumer down the road.
Read More →
Trade-Ins in Negative Equity Reach New Heights
As such trade-ins rise in frequency, so do monthly loan payment amounts and interest rates, according to second-quarter data compiled by Edmunds.
Read More →
Auto Credit Plentiful
June numbers show lenders are readily granting access, including to risky borrowers, as consumers leverage themselves to take on high prices.
Read More →
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Porsche Financial Services Shifts Structure
After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
New Cars a Tad More Affordable
May averages show that combined circumstances gave auto consumers slightly better buying power for the month, though average prices were up year-over-year.
Read More →
First-Quarter Sees Long Auto Loan Growth
Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.
Read More →
Mastering Credit Friction
In this video, Josh Krach explains how to turn credit friction into an advantage.
Read More →