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Resilient Used Vehicles Keeping Depreciation at Bay

November 13, 2017

Photo of 2017-MY large pickups courtesy of manufacturers.
Photo of 2017-MY large pickups courtesy of manufacturers.

Used vehicles from one to five years old fell 1.4% in value in October in a steady used-vehicle market that showed significant improvement from a year ago with large pickups leading the way, reports Black Book.

A year ago, used vehicles depreciated 2.9% in October, which was an increase from the 2.3% in September of 2016. This year, vehicles are depreciating at a rate of 13.2% for the 12 months that ended with October.

Two hurricanes that struck the Houston area and south Texas created demand for replacement vehicles, which is keeping the used vehicle market strong, said Anil Goyal, senior vice president of automotive valuation and analytics.

"With the hurricane damage replacements continuing, we saw a better-than-usual October depreciation rate," said Goyal. "However, with most of the replacement activity behind us, we will start to see seasonal depreciation patterns as we end the final quarter of the year."

In October, cars depreciated 1.8%, while trucks decreased 1.1% in value.

Full-size pickups showed the best value retention by depreciating 0.1%. The segment ended the month with an average price of $24,244, a 4.7% drop from a year ago. Vehicles in this segment include the Chevrolet Silverado 1500, Ram 1500, GMC Sierra 1500, and the Ford F-150.

Once again, higher-end luxury car models are taking the brunt of the depreciation.

Premium sporty cars saw the largest decrease in value, falling 2.6% to $39,102. The segment has depreciated 17.5% in the past year. Vehicles in the segment include the BMW 6-Series, Chevrolet Corvette, Porsche 911, Jaguar F-Type, Mercedes Benz SL-Class and the Lexus RC350.

Prestige luxury cars have the highest depreciation over the last 12 months, decreasing in value by 25% to $32,213 since November of 2016. Vehicles in this category include the BMW 7-Series, Lexus LS 460, Porsche Panamera, Jaguar XJ, Mercedes Benz S-Class and Audi A8.

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