According to NADA Used Car Guide, wholesale prices for used vehicles south of the border fell to their lowest level in three years last month. Prices were down 3.5 per cent — almost a point higher than the decline in September.
“Without the drama created by federal lawmakers that resulted in the shutdown, it’s likely that October’s rate of decline would have been directly in line with recent seasonal norms,” said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide, in the November edition of Guidelines, a monthly report on new and used vehicle sales trends and price movement.
October’s softness dropped NADA’s seasonally adjusted used vehicle price index to 123.8, down one point from September’s figure of 124.8. Year-to-date, however, prices remain 0.5 per cent higher than they were through October last year.
At the segment level, midsize vans recorded the biggest monthly decline as prices fell 4.7 per cent — slightly more than the 4.2 per cent drop in October 2012. This acute decline can be attributed to the substantial rental fleet exposure and the fact that rental companies remarket large quantities of similarly equipped units at auction over a compressed period of time.
Prices for luxury and compact cars also experienced declines slightly higher than the market average, falling by 3.8 per cent and 3.6 per cent respectively. Large pickups posted another strong showing last month, but October’s 2.3 per cent decline was slightly more than the 2 per cent drop recorded during the same period in 2012, and higher than the previous three-month average of 0.4 per cent.
On a year-to-date basis, vehicles up to eight years in age carried a mix and seasonally adjusted average price of $15,066, a figure up slightly from 2012’s average of $15,042 and $388 higher than 2011’s average of $14,678.
Projecting through December, given the absence of any looming governmental crisis, there is little to suggest that depreciation over the final two months of the year will deviate from seasonal trends, Banks added.
“While lower consumer confidence provides concern that consumer demand, and thus used vehicle prices, could take a steeper-than-expected downward turn, we expect that consumer confidence will rebound given the end of the federal government hiatus and October’s decent employment report,” Banks said.
As a result, NADA expects that used prices will fall by an average of about 1.9 per cent over the next two months. While higher than 2012’s Superstorm Sandy-influenced decline, this year’s forecast is just slightly higher than the 1.5 per cent decline recorded for the period back in 2011.
Trade-in values in November’s edition of the Official NADA Used Car Guide were lowered by an average of 2.5 per cent, which is the most significant reduction recorded since last November’s adjustment of 2.7 per cent. Reductions across model years fell within a tightly grouped range of 2.2 per cent to 2.8 per cent with least-to-greatest figures corresponding to the 2009 and 2012 model years, respectively.
October’s result along with NADA’s prediction for the remainder of the year would see used vehicle prices finish 2013 at 0.3 per cent to 0.8 per cent higher than 2012’s record level.
