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Used-Car Prices Set to See First Decline This Year

In some perhaps surprising news for the industry, after prices for used cars saw double-digit gains from January through May, NADA Used Car Guide reported today that rates are expected to hit the brakes come June.

With prices on many popular used compact and midsize cars predicted to drop up to 5 percent month-over-month, NADA UCG explained some reasoning behind the sudden dip.

Jonathan Banks, NADA UCG senior analyst, noted, "The trend of rising prices for used cars will reverse course in June because of declining gasoline prices combined with a normal seasonal slowdown in consumer demand for used cars."

Specifically, used-car values will decline by about 2 percent, while truck values will fall by about 1 percent or half of the amount of cars, according to the June edition of the NADA Official Used Car Guide.

Moreover, prices for used compact and midsize cars will fall by an average of 2.4 percent, with many units seeing even bigger declines.

Hybrids Expected to Slide

And after high fuel prices left many gas-sipping units in high demand with prices soaring, many of these compact vehicles will fall back to more normal levels in June.

"During periods of rapidly changing gasoline prices, values of hybrid vehicles become more volatile because consumer demand for hybrids rises and falls along with the price of gasoline," Banks added.

For example, the 2011 Toyota Prius Liftback 5D is predicted to fall $900 in June, after increasing in value by $2,350 from January through May, NADA UCG reported.

"Prices on the Toyota Prius will drop even more dramatically in June," Banks said. "Rapid depreciation for hybrid vehicles is not uncommon after surging gasoline prices reach a peak and then begin to quickly fall."

And in looking ahead to July, NADA UCG expects this trend to continue among small and midsize cars.

"The NADA Used Car Guide is forecasting that depreciation for small and midsize cars, which experienced the greatest appreciation over the first part of 2012, will see values continue to drop sharply," officials concluded.

NADA UCG also provided the following chart to illustrate the used-car price slide expected this June: