TYSONS, Va. — Wholesale prices for cars eight years or older fell by 2% in May, according to June’s NADA Used Car Guide. The report stated that the price for used mainstream cars continued to fall at industry-high rates in May. However, it added that May’s overall performance was better than expected.

The report noted that the 2% drop in used-vehicle prices was better than the 2.7% drop recorded for the month over the past four years. Due to this improvement, the NADA Used Car Guide’s seasonally adjusted used-vehicle price index rose for the first time this year by 0.7% to 119.1.

“When compared to the same period in 2015 on an index basis year to date, average prices this year are down by about 4%. Through the first five months of the year, depreciation has accelerated at a steeper rate for small to mid-size cars, as well as small and mid-size utilities. Vehicles in the large car, truck, SUV and luxury segments have fared better,” the report stated.

The best performing segments for the month were mid-size and large pickup trucks by a large margin. Prices for the two segments fell by a combined average of 0.4% during the month, a slight improvement over the previous month’s drop of 0.6%.

Mid-size vans also fared well. The segment saw prices fall less than 1% in May, marking an approximate 1.5% improvement over the last two years.

Luxury vehicle prices performed better than the rest of the mainstream segments, the report stated. Luxury CUV prices saw the steepest fall with a 2.1% drop in price. The rest of the luxury segments averaged a 1.2% drop, according to the report.

Compact car prices suffered the biggest dip, with prices for the segment falling 3% in May. Large and mid-size cars followed closely behind with a 2.7% price dip, while subcompacts saw prices fall by 2.4%. Subcompact prices could have been worse, the report stated, but a “17% pullback in late-model auction sales volume over the month” helped performance.

Even the much sought-after CUV segment experience above-average depreciation in May, according to the report. The report cited a growing pool of supply and higher new-vehicle incentives for the segment’s price drop of 2.5%.

On a year-to-date basis, CUV depreciation is nearly 5% worse compared to the fourth quarter of 2015. CUVs are now tied with subcompacts and compact cars for the biggest negative swing in the industry, the report stated.

Originally posted on F&I and Showroom

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