Used Vehicle Depreciation Rate Continues to Climb

July depreciation ties June for the biggest loss recorded in 2016

MCLEAN, Va., Aug. 11, 2016  -- Wholesale prices of vehicles up to eight years in age fell by 2.3 percent in July compared to June. According to the August edition of NADA Used Car Guide's Guidelines report, July's decline ties June for the biggest loss recorded this year.

Jonathan Banks, executive analyst at NADA Used Car Guide said, "Price movement at the segment level followed the trend we've witnessed the past few months where car losses were greater than trucks."

Banks went on to say, "Used subcompact car prices fell by an average of 3.9 percent. That's the largest segment decline this past month."

As a result, NADA Used Car Guide's seasonally adjusted used vehicle price index fell by 1.3 percent to 118.9, according to the August Guidelines report.

The report points out that July prices of used mainstream cars fell at rates above the industry average for the period:

  • Subcompact cars depreciated 3.9 percent; the largest segment drop in July.
  • Mid-size and large cars depreciated an average of 2.9 percent. While the dip was larger than the industry average, it was typical for the period. Depreciation for both segments reached an average of 2.9 percent.
  • Large car depreciation averaged 2.5 percent, but matched the segment's previous three year average for the period.

July did have some high points in the used car market, however. Large utility and large pickup prices showed exceptional strength and experienced only slight losses of 0.3 and 0.5 percent, respectively.

On the luxury side of the market, July losses were mixed across the board:

  • Small luxury vehicles depreciated more than mid-size and large luxury vehicles.
  • Luxury compact utility prices dropped by 3.1 percent.
  • Luxury compact cars depreciated by 2.7 percent.

What Does the Future Hold?

NADA Used Car Guide forecasts prices of vehicles up to eight years in age to fall by 2.5 to 3 percent compared to July.

September and October depreciation is expected to fall around 3.2 to 3.7 percent, with full year price depreciation less than 5 percent on an index-basis from 2015.

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