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Prices of Used Vehicles Projected to Slip
NEW ORLEANS -- A sharp rise in the supply of late-model used cars and light trucks is expected to end a five-year run of price growth, the NADA Used Car Guide says. The supply of late-model used cars and trucks will be more plentiful the result, in large measure, of an 18% surge in off-lease volume.
The supply of units six to eight years old, however, will continue to fall as a byproduct of the new-vehicle sales decline from 2006 to 2009, according to the guide. "These diverging trends will result in late-model used-vehicle prices dropping more substantially than their older counterparts," Jonathan Banks, executive automotive analyst for the NADA Used Car Guide, said at the 2014 NADA Convention & Expo here.
NADA predicts prices of used vehicles up to four years old will decline this year by an average of 2.5% annually. In comparison, the prices of units five to eight years old will essentially remain flat.
Collectively, NADA anticipates the average price of used vehicles up to eight model years in age will fall by 0.5% to 1% this year. In 2013, prices grew by a slight 0.4% and have increased 18% since 2007. "Although availability of off-lease units will be better this year, it's important to place volume levels into historical context," Banks said. "Despite the increase, lease volume will still be 11% below 2009 levels."
Volume growth will be highest for the segments with higher new sales over the past few years -- compact utilities, subcompact cars, luxury cars and sport utilities. Conversely, tight supply for some truck segments -- mid-size vans, large SUVs and compact/large pickups -- will see prices increase once again this year.
Published by The Business Journal, Youngstown, Ohio.
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