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Rising incentives, high trade-in values to boost new-vehicle sales: NADA

August 16, 2013
Generous automaker incentives and high trade-in values will keep the new-vehicle sales momentum going during the third quarter, an analyst for NADA Used CAR Guide, Jonathan Banks, said in a monthly report on new- and used-vehicle sales trends and used-vehicle price movements.
“Traditionally, this is the time of the year when auto manufacturers increase incentives on outgoing model year vehicles to make room for the new model year fresh off the assembly line and headed to dealer showrooms,” Banks said.
The NADA anticipates that August will bring another month of comparatively mild depreciation for used cars and light trucks up to 8 model years in age.
On average, trade-in values in the August edition of the NADA Used-Car Guide were adjusted down by 1.5 percent and, staying true to recent trends, downward price movement for cars exceeded trucks, 1.7 percent to 1.2 percent, respectively.
Auction prices for used vehicles up to 8 model years in age fell a modest 1 percent last month, a figure substantially better than the 2.6 percent loss in July 2012 and less than the 1.6 percent drop in July 2011. Prices fell 1.1 percent in June 2013.
Through the first seven months of the year, the average auction price of used vehicles up to 8 years in age was $15,064, nearly identical to $15,040 in 2012 and $518 higher than 2011’s average of $14,546 compared to the same period.
At a vehicle segment level, prices in July remained strong for large pickup trucks as well as large and midsize SUVs. Prices for large pickups remained unchanged in July, while the combined 0.6 percent drop in prices for large and midsize SUVs was modest. Larger losses were recorded for the compact car (-1.8 percent), luxury car (-1.7 percent) and midsize van (-1.6 percent) segments in July.
After months of steep depreciation, values for 2011 and 2012 model year Chevrolet Volt and Nissan Leaf plug-in electric vehicles were adjusted down by a comparatively mild average of 1.8 percent in August, the NADA reported.
“The slower rate of depreciation for plug-in electric vehicles over the past month may be an indication that values are beginning to settle at price points more appealing to used-car shoppers,” Banks said.
While current data continues to suggest that 2013 will end with used-vehicle prices remaining at a high level, NADA officials expect that the pace of depreciation will accelerate to a range of 2.2 percent to 3.0 percent in September and October, as the market enters what typically is the softest part of the year, said Banks.