Used-Vehicle Prices Remain Steady Through August
The same factors behind the surge in new-vehicle sales are having the same effect in the used-vehicle market, the NADA Used Car Guide reports.
McLEAN, Va. — The same factors causing a surge in new-vehicle sales — pent-up demand, low interest rates and heated competition among finance sources eager to grow their loan portfolios — are having a similar effect in the used-vehicle market, according to the National Automobile Dealers Association (NADA) Used Car Guide.
“Consumer demand for used cars and light trucks has kept growing this year, which has continued to fuel strong prices for used vehicles,” said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide, in the September edition of Guidelines, a monthly report on new- and used-vehicle sales trends and used-vehicle price movement.
Used-vehicle prices have remained at a historically high level through the first eight months of the year. Vehicles up to eight years in age carried a mix- and seasonally-adjusted average price of $15,113, a figure up slightly higher than 2012’s average and $463 higher than 2011’s average.
With a drop of 1.1 percent in August, used-vehicle prices matched the average rate of loss in June and July. Large pickups continued to outperform other segments, with wholesale prices increasing by an average of 0.2 percent during the month.
August’s comparatively light drop lifted NADA’s seasonally adjusted Used-Vehicle Price Index to 124.8, up more than one point from July’s figure of 123.5 and the highest level recorded so far in 2013. The index measures the change in price for used vehicles up to eight years old.
Historically, the fall and winter months are the softest time of year for used-vehicle prices, partly because of increasing supply from rental car companies offloading year-old units to make room for new models. Banks also attributed the softening of pricing during those months to consumers shifting their focus and household budgets to the start of the new school year and impending holiday season.
“The NADA predicts that the rate of decline will be considerably less than what has been recorded for this period in large part because a ravenous consumer appetite for used vehicles is being fed by incredibly favorable credit conditions,” Banks said.
Trade-in values in September’s edition of the NADA Official Used Car Guide were adjusted down by an average of 1.4 percent, which is a considerable improvement from the 3 percent drop recorded for the same month in 2012.
For the fourth quarter of 2013, the NADA projects that the average rate of decline will fall within a range of 1.6 percent to 1.9 percent, with the largest drop in price occurring in October. By comparison, prices dropped an average of 2.2 percent in the fourth quarter of 2011, the most recent benchmark. (Last year, prices were unusually strong in the fourth quarter because of the Hurricane Sandy-induced spike in demand for used vehicles).
When August’s strength is combined with a slightly more positive outlook for the rest of 2013, the NADA expects the average price of units up to eight years in age will be up by 1 percent compared to 2012, instead of remaining essentially flat as previously predicted.
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