With only a couple of months remaining in the year, J.D. Power Valuation Services is holding steady on its forecast for where wholesale prices are likely to land by the time 2019 finishes.
Reiterating its forecast even though six consecutive months of index increases came to an end in September, analysts said used-vehicle prices are expected to remain “relatively strong” as the year concludes. J.D. Power Valuation Services expects used prices for vehicles up to 8 years in age to increase by about 1% to 1.5%.
“From where prices are currently through the remainder of the year, we are expecting a mild decline, which barring any serious weather impact or economic changes should hold true,” analysts said in their latest installment of Guidelines.
“Used supply will be mixed, positive for cars, negative for SUVs and trucks,” analysts continued in the report. “The impact of other factors including gas prices, home prices and labor conditions are expected to be neutral-to-supportive of used prices.”
As mentioned, J.D. Power Valuation Services pointed out the used-vehicle market slowed in September following six straight months of index increases. As a result, the J.D. Power Valuation Services Used Vehicle Price Index declined by 1.8% relative to August as the September reading came in at 121.8.
Through September, analysts computed that used-vehicle prices are, on average, 1.7% higher than during the same nine-month period in 2018.
“Prices continue to be supported by high levels of clean late-model used units entering the market at attractive price points relative to comparable new models, as well as increased dealer demand for used vehicles,” analysts said in the report.
In September, J.D. Power Valuation Services determined wholesale prices declined by an average of 2.9%, a figure in line with to the previous five-year average for the period — a 2.4% drop.
At the segment level, analysts indicated declines on the mainstream side of the market fell in the 2% to 3% range except for midsize vans.
“The September period is generally one of the toughest times of the year for midsize van prices, historically this has been the time when rental companies cycle out midsize van units after the summer rental season ultimately increasing wholesale volume for the segment and depressing prices for the short term,” analysts said.
“Premium prices were generally stronger than their mainstream counterparts, premium SUV prices performed better than premium cars,” they continue.
In terms of individual segment performances, J.D. Power Valuation Services discovered year-to-date mainstream passenger car price increases continue outpacing their SUV counterparts.
“Affordable small, compact and midsize car segment prices have increased the most, prices for the group are up by 6% to 9%,” analysts said.
“Mainstream SUV segment prices have also increased, however not nearly to the same degree as passenger car,” they continued.
As for the luxury side of the market, J.D. Power Valuation Services mentioned premium segment prices are down throughout the space, except for large premium cars, “however, losses are accelerating for this segment.
Analysts added, “Premium segments continue to feel the pressure of elevated levels of wholesale volume returning to the market.”
Source : AutoFinanceNews
