Prices of used vehicles to drop in June and July, says NADA

Article by Anita Panait, on June 13, 2012

Analysts predict that prices of used vehicle will go down, but will remain at a high level. According to NADA Used Car Guide, the prices of used vehicles up to eight years old will drop in this month, while prices of some fuel-efficient used cars will decline by up to five percent. The Manheim Used Vehicle Value Index -- measures changes in used-vehicle prices and is adjusted for vehicle age, mileage and time of year -- shows that the price drop has already started. 

The index in May 2012 was 125.1, down from 126.1 in April 2012 and 127.8 in May 2011. Larry Dixon, an analyst with the NADA guide, remarked that despite the price drop, the overall prices of used vehicles are high and remain to be so. High used vehicle prices mean consumers have considerable equity in their vehicles, which is important when they trade them in for new ones. Dixon forecasts that the trade-in values of used cars will be less in June than it was in May or April, although the values remain at historical highs.

NADA Used Car Guide expects that gasoline prices and seasonal trends will trigger a drop in the values of used cars by an average of two percent in June compared to May, while the prices of used trucks will decline by an average of one percent. NADA Used Car Guide also expects prices of used compact and mid-sized cars to drop an average of 2.4 percent in June and July.

Data show that values of used cars grew six percent while values of trucks fell about 1.6 percent from January through May. NADA Used Car Guide, however, predicts that prices of some 1- to 3-year-old subcompact and compact cars will drop up to 5 percent during June compared with May levels.

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