Both in Canada and the U.S. prices for used vehicles continue to remain high, facilitated by lower supply and higher quality cars and trucks. In the U.S. the NADA Used Car Guide said that prices for used cars and light trucks of 4-10 years in age are expected to remain 0.5 per cent higher than comparable vehicles in 2012. However the Guide also said it expects prices for vehicles up to three years in age to decline slightly — by 1.5 per cent compared with last year.
“Historically speaking, reliability and unexpected repair cost concerns meant that vehicles over five years of age took a backseat to their younger, in-warranty counterparts in terms of demand,” remarked Jonathan Banks, executive automotive analyst for the NADA Used Car Guide. “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 4-10 years old have stayed high, with prices essentially unchanged from the historically high averages observed in 2012. Prices for later-model vehicles less than four years in age fell by 1.2 per cent over the same period.
Looking ahead, NADA believes the combination of rising supply, combined with stronger new vehicle demand and favourable incentives, will translate into a steady softening of later-model used vehicle prices through 2014.
Conversely, it is expected that advances in dependability and affordability relative to newer used models, as well as a rolling wave of lower supply stemming from the recession will keep prices for older models high over the same period.
For 2013, NADA forecasts that prices of units 1-3 years in age will be 1.5 per cent lower than similarly aged units were in 2012, and that prices for units 4-6 years in age will be 1.5 per cent higher. Slipping by an average of just 0.2 per cent, prices for 7-10-year-old models are expected to be relatively unchanged.
Regarding model year-specific expectations, NADA predicts that used prices for 2013 model year units will fall by 16 per cent from 2013 to 2014 — the steepest decline expected over the period. Depreciation for other model years is expected to range from 15.1 per cent for model year 2012 to 14.2 per cent for model year 2008. Depreciation is expected to average a moderately higher rate of 15 per cent for model years 2004 to 2007.
