Consumer demand for vehicles increased in May
June 16, 2014
There's good news for the nation's auto insurers. Consumer demand for automobiles climbed in May, according to NADA, which represents nearly 16,000 car and truck dealerships.
SUVs tend to hold their value more than other vehicles.
"Auto demand blossomed in May as warmer weather and the fast approaching summer vacation season pulled more consumers to dealer lots,” said Jonathan Banks, executive automotive analyst of NADA Used Car Guide.
The demand sparked a price increase among the nation's used vehicles, as seasonal demand lifted NADA's used vehicle price index to a reading of 126.8, beating out the previous month's record total by 0.5 percent.
Depreciation for used vehicles up to eight years old dropped just 2.2 percent compared to April, leading to the escalating prices when seasonally adjusted. Depreciation for all sectors of the market was similar to what occurred in 2011 and 2012. That was when price diminishes for small and midsize cars surpassed the overall market average, while losses for other vehicle types were at or below the industry average.
“A combination of pent-up demand and restrained supply stemming from severe winter weather drove prices well above expectations in March,” Banks said. “Over the past two months, though, prices have steadily realigned with NADA's predicted path.”
The depreciation of subcompact, compact and midsize cars fell 2.8 percent in May. Luxury compact cars dropped 2.4 percent, the same amount that large SUV prices fell during that time.
NADA reported that the price drop seen with luxury compact cars is not outside the norm. However, the depreciation for large SUVs was somewhat surprising. It was just the second time since 2011 that large utility vehicles saw depreciation of more than 2 percent.
Consumers in the market looking to buy a new or used car should consider buying insurance from SelectQuote Auto & Home, which compares prices and plans from the nation's premier insurance providers.
Vehicles that retain value
According to AutoExpress, SUVs and 4x4s hold their value better than any other type of vehicle. SUVs retain 46.6 percent of their original sales price after a 3-year, 36,000-mile ownership period.
AutoExpress also stated that sports cars, luxury cars and executive cars—larger sedans—are the next best types of vehicles for retaining value.
The top three vehicles found to be best at holding their value are the Porsche Cayenne, Audi Q3 and Range Rover Evogue, according to AutoExpress. All these vehicles are classified as SUVs.