Market Overview

Used Car Price Decline Forecast to Slow to 1.07% in 2019, According to Moody's Analytics

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Used car prices will stabilize over the next three years, according to
the Moody's Analytics Used Car Price Outlook. Off-lease volumes will
continue to rise, yet at a decreasing rate, giving dealers a better
chance to adjust to the higher volumes.

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Off-lease volumes will continue to rise over the next few years according to the Moody's Analytics U ...

Off-lease volumes will continue to rise over the next few years according to the Moody's Analytics Used Car Price Outlook, yet at a decreasing rate, giving dealers a better chance to adjust to the higher volumes.

This trend, together with tightening credit standards among lenders,
rising interest rates, and attractively priced, high-quality used
inventory will cause consumers to seriously consider alternatives to
buying new cars, stimulating demand for used vehicles and supporting
prices through 2019. Moody's Analytics forecasts that the used car and
truck Consumer Price Index will post a year-over-year decline of 1.07%
in 2019, slowing from a 3.63% decline in 2017, before prices reach
bottom in 2020.

"Decreasing new vehicle demand and tightening credit conditions will
have important implications for used vehicle markets over the next few
years," said Michael Vogan, Moody's Analytics Auto Economist and author
of the report. "We forecast new vehicle sales to drop to just over 16
million by 2020, and with that will come a decline in dealer-consigned
trade-in sales at auction."

Used-Car
Price Outlook: Light at the End of the Tunnel
, is the first of a
series of quarterly economic outlooks on the used car market from
Moody's Analytics. These reports will provide regular economic analysis
of trends in the used vehicle market and an outlook for used vehicle
prices using the Moody's
Analytics AutoCycle™
residual vehicle value forecasting model.

The Moody's Analytics AutoCycle model predicts that average 3-year-old
light truck and SUV residual values will decline steadily from 56% to
50% of list prices over the next three years, while car residual values
are expected to rise from 47% to 49% of list prices during the same
period. We therefore expect prices between these two major segments to
converge as downward supply forces switch in the coming years,
equilibrating the market by the end of the decade.

Mr. Vogan continued by saying "future used car prices will no doubt be
lower than the highs of 2012, but at least they will be stable."

View
more analysis on autos from Moody's Analytics.

About Moody's Analytics

Moody's Analytics provides financial intelligence and analytical tools
supporting our clients' growth, efficiency and risk management
objectives. The combination of our unparalleled expertise in risk,
expansive information resources, and innovative application of
technology helps today's business leaders confidently navigate an
evolving marketplace. We are recognized for our industry-leading
solutions, comprising research, data, software and professional
services, assembled to deliver a seamless customer experience. Thousands
of organizations worldwide have made us their trusted partner because of
our uncompromising commitment to quality, client service, and integrity.

Moody's Analytics is a subsidiary of Moody's Corporation (NYSE:MCO). MCO
reported revenue of $4.2 billion in 2017, employs approximately 11,900
people worldwide and maintains a presence in 41 countries. Further
information about Moody's Analytics is available at www.moodysanalytics.com.

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