The U.S. used vehicle market veered off the normal course of anticipated growth in February with a steep decline, taking analysts by surprise, according to J.D. Power. “Used vehicle prices were exceptionally soft in February 2017,” said Larry Dixon, J.D. Power Senior Manager of Market Intelligence in a statement.
Dixon said that prices of vehicles up to eight years old fell by 1.6 per cent, compared to January, which is “rather significant considering that prices are normally flat if not up, in a given February. He pointed out that it’s only the second time in the last twenty years where prices have fallen in the second month of the year.
Several different factors contributed to February’s unexpected price decline, say market intelligence analysts at J.D. Power’s Valuation Services division. Most significantly, compared to previous years, federal tax refunds were not distributed quickly enough. Buyer’s normally use these funds to purchase big-ticket used vehicles.
Manufacturers also contributed to underperformance by dialing up incentive spending by 18 per cent as a way of reducing decade-plus high new vehicle inventory levels.
And the volume of late-model auction sales increased six per cent from its January volume.
