Lower Prices Seen for Used Cars, Trucks as Over-Supply Looms

There are more used vehicles up for sale and incentives for buyers are escalating. That means lower prices for the foreseeable future, experts say.
A big factor that will fuel this trend: Americans are projected to return 3.36 million leased cars and trucks this year, another increase after a 33 percent jump in 2016, according to J.D. Power.
A National Automobile Dealers Association index measuring wholesale prices of used vehicles up to eight-years-old fell at an above average rate of 1.7 percent in December, compared to November. The drop was more than three times worse than the 0.5 percent loss averaged for the month from 2010 through 2014.
“Higher supply and escalating incentives continued to chip away used vehicle prices in December,” the NADA says in its latest report.
The NADA Used Car Guide’s price index dropped about 4 percent last year from 2015’s average price. That’s the first big drop since the recession.
“On an annual basis, 2016 will be remembered as the first year since the end of the Great Recession to experience a significant drop in used vehicle prices,” NADA states. ” For context, NADA Used Car Guide’s used vehicle price index steadily increased after bottoming out in 2008, rising by 33 percent through 2014 to an all-time high of 124.1.”
An easing in used-vehicle pricing first appeared in 2015. Exceptional truck and utility sales held overall index losses to a scant 0.3 percent that year, NADA says.
The weakening increased in 2016 as prices fell markedly (for both cars and trucks) on a universal scale, pulling Used Car Guide’s index down to a full-year average of 118.7.
U.S. car sales, led by robust light-truck demand and solid gains at General Motors, Nissan and Honda in December, hit a record high in 2016. Overall sales rose by more than 56,000, or 0.3 percent, over the 2015 record. It was the
seventh straight year of sales gains for new cars and light trucks.

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