Number of segments to see auction price drops by end of year


Though used prices were still on the way up in May as summer neared, according to RVI data, analysts are still predicting a slow downturn in auction prices - potentially causing some relief for dealers and buyers in the lanes - to begin shortly.

According to RVI's Q2 Risk Outlook, after adjusting for MSRP, used vehicle prices in May rose by 1.2 percent from April. This represents a 2.1 percent increase year-over-year.

"Real used vehicles prices increased in May, but we expect a softening in residual values over the next several years," RVI analysts reported.

According to the report, most all segments RVI tracks saw auction prices increase in May, with midsize sedans leading the spikes for the higher volume segments.

Midsize sedan prices rose by 10.6 percent in May when compared to April and 7.8 percent year-over-year.

That said, according to RVI's price index forecasting, this same segment is predicted to see rates drop by 2.2 percent by the end of the year from current levels.

Another segment touting an impressive increase in rates were the luxury full-size sedans, which saw prices rise by a whopping 22.4 percent from April and 24.5 percent year-over-year.

And the same goes for this segment - rates are not expected to stay elevated. By the end of the year, RVI predicts the luxury full-size sedan segment to see a 1.5 percent decline in price from current levels.

And though most all segments saw prices rise by at least 1 percent, there were a few outliers.

For example, the full-size van segment saw prices fall the most with a 16.5-percent decline from April and a 3.5 percent drop year-over-year.

RVI predicts prices for this segment will drop by 0.2 percent from current levels and end the year 10.6 percent lower than December 2014.

The luxury coupe segment also performed poorly with rates dropping by 10.5 percent when compared to April and 2.3 percent year-over-year. This segment is predicted to see prices rise by 2 percent from current levels by the end of the year, but rates are expected to finish 2015 1.9 percent lower than the year before.

And though prices remain high today, over the next five years, RVI expects a "softening" in used-vehicles prices throughout Canada.

This is expected to be spurred as the currently tight supply of used vehicles is expected to ramp up by 2019.

RVI predicts that by 2018, the industry can expect prices by have fallen by 2.8 percent from current levels.

"The major factor in this decrease in prices is the increase in the supply of used vehicles in Canada. The RVI Used Vehicle Stock Index is expected to rise on a yearly basis through 2019," RVI analysts said.