Used prices expected to slip this year, as off-lease volume surges

Used prices expected to slip this year, as off-lease volume surges

A sharp rise in the supply of late-model used cars and light trucks is expected to end a five-year run of price growth, according to the NADA Used Car Guide.

Late-model used vehicle supply will grow in large part because of an 18 percent surge in off-lease volume. The supply of units six to eight years old will continue to fall as a result of the big drop in new-vehicle sales from 2006 to 2009. Jonathan Banks, executive automotive analyst for the Used Car Guide, made the forecast at the NADA Convention.

NADA predicts prices of used vehicles up to four years old will fall by an average 2.5 percent on an annual basis in 2014. Prices of five-to eight-year-old units are expected to remain flat.

Despite the increase in off-lease units this year, lease volume will still be 11 percent below 2009 levels, Banks said.

Volume growth will be highest for the segments with higher new sales in the past few years – compact utilities, subcompact cars, luxury cars and utilities. Tight supply for certain truck segments – midsize vans, large SUVs and compact/large pickups – will mean price increases in 2014.