Black Book’s Used Vehicle Retention Index registered its first monthly gain of the year, ticking up to 114.4 in May. But analysts warn waning demand could follow a strong end to the spring selling season.
Black Book and Fitch Ratings’ annual used-vehicle depreciation and auto ABS report predicts a 15% depreciation rate for U.S.-registered vehicles, up from 12.4% in 2018.
Wholesale values continued to see little change last week, although demand for sporty cars appears to be dwindling as the average value of that segment has begun to drop.
Last week, car segment values were up 0.26% compared to the 0.01% depreciation the segment experienced the week prior. This added up to the strongest week for car segment values in two years.
The firm had expected a steeper decline due to replacement activity linked to last year’s hurricanes. Instead, Black Book saw fairly typical depreciation.
The beginning of tax season saw stronger sales at auction, especially for mainstream car segments. Mid-size cars led the way in terms of value retention in the car segment, while minivans, full-size vans and small pickups saw no change last week.
The two new programs are backed by Lyndon Southern Insurance Co. The first provides a trade-in credit of up to $10,000 if a vehicle is involved in a collision and repaired, while the other pledges to cover depreciation (up to $10,000) if a vehicle is stolen and not recovered or is deemed a total loss as a result of an accident.
Subcompact crossovers joined the full-size vans and minivans as the truck categories registering the steepest declines in value last week, while subcompact cars joined full-size cars and sporty cars as the depreciation leaders in the car segment.
Premium sporty cars recorded the largest decrease in value in October, while prestige luxury cars have registered the highest depreciation over the course of the last 12 months.
Depreciation increased for both cars and light trucks, with car segments recording the highest weekly depreciation in seven weeks. Prices in the Houston-area, however, remain elevated, according to the firm.
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