LAWRENCEVILLE, Ga.—Expect the downward pressure on used car values to continue for several years, reports Black Book, which is projecting that residuals on average three-year-old vehicles will dip from the current three-year retention of 52% in 2016 to 47.8% by 2019.
That forecast supports continuing concerns over sliding used car values. Used values remained high during the recession and shortly afterward, peaking at a 54.5% retention rate in 2013.
Black Book attributes the continuing used value slide to strong new car and truck sales, and the glut of trade-ins returning to the market.
“The increased level of supply in the used market has begun to weaken prices on both cars and trucks,” said Anil Goyal, senior vice president of automotive valuation and analytics. “We saw the first sign of this in 2015, when cars saw above-average depreciation on the year, and this year we will see rising depreciation for truck segments as well.”
Favorable credit availability, continued growth in demand, and consistently low gas prices have provided support in keeping retention rates high in the last five years, he said.
Below is Black Book’s look-back and look-ahead at used values on average three-year-old vehicles:
- 2012: 53.8%
- 2013: 54.5%
- 2014: 54.3%
- 2015: 54.1%
- 2016: 52.0%
- 2017: 50.1% (forecast)
- 2018: 48.6% (forecast)
- 2019: 47.8% (forecast)