Higher Quality, Tight Supply Keep Used-Car Prices High
McLEAN, Va. -- Prices for used cars and light trucks from four to 10 years old are expected to be 0.5% higher this year than like-age units were in 2012, NADA predicts. But a steady softening of later-model used vehicles is expected through 2014.
NADA is the National Auto Dealers Association.
By comparison, NADA predicts that prices of vehicles up to three years old will be 1.5% lower than the prices of similar vehicles last year. “Historically speaking, reliability and unexpected repair cost concerns meant that vehicles over five years of age took a back seat to their younger, in-warranty counterparts in terms of demand,” said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide, in a prepared statement. “However, rapid advances in dependability over the past decade have changed consumer attitudes towards purchasing older vehicles.”
Through the first half of 2013 prices for units from four to 10 years old have stayed high, prices essentially unchanged from the historically high averages seen in 2012. Prices for later-model vehicles less than four years old fell by 1.2% over the same period.
Looking ahead, NADA believes the combination of rising supply, combined with stronger demand for new vehicles and favorable incentives, will translate into a steady softening of later-model used-vehicle prices through 2014.
Conversely, NADA expects that advances in dependability and affordability relative to newer used models, as well as a rolling wave of lower supply caused by the recession, will keep prices for older models high over the same period.
For this year, NADA forecasts that prices of units one to three years old will be 1.5% lower than similar units last year, and that prices for units four to six years old will be 1.5% higher. Slipping by an average of just 0.2%, prices for models seven to 10 years old are expected to be relatively unchanged.
Regarding model year-specific expectations, NADA predicts that prices for 2013 used models will fall by from this year to next -- the steepest decline expected over the period. Depreciation for other model years is expected to range from 15.1% for model year 2012 to 14.2% for model year 2008. Depreciation is expected to average a moderately higher rate of 15% for model years 2004 to 2007.
Published by The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our free daily email headlines and to our twice-monthly print edition.