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Trucks Prop Up New- and Used-Vehicle Markets, According to NADA Report

J.D. Power and Associates

Auto sales remain strong, despite little if any U.S. GDP or employment growth in the first quarter, according to the May edition of the NADA Used Car Guide Industry Update. NADA Used Car Guide provides U.S. retail, loan, trade-in, and auction used-vehicle values, and publishes "Guidelines"--a monthly update.

On a positive note, the U.S. housing market continues to slowly but steadily recover following the economic downturn and NADA analysts agree that the auto market--especially sales of light trucks--is surging even with a pullback in oil drilling that was responsible for lower gas prices.

NADA Guide's Update also asserts that as income and wage levels rise, there is potential for accelerated growth in the second half of 2015. New-vehicle sales are setting a strong seasonally adjusted selling pace--exceeding 16 million units--and the used-vehicle market, which began to weaken in April (dipping by 1.4% for vehicles up to 8 years old), is still recording strong prices for used pickup trucks and utilities, according to the update.

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A few new- and used-vehicle sales, pricing, incentive, and trade-in highlights from NADA Used Car Guide's recent update are summarized below:

Used-Vehicle and Auction Market Trends

  • Year-to-date auction volume was 7% higher than in the same four months a year ago.

  • Used-vehicle prices improved in the first-quarter but fell moderately in April. Passenger car prices dipped more than prices of used trucks.

  • Prices for used midsize vans dipped by 1.6% in April--the only truck segment to depreciate on a par with used cars.

  • Used luxury, midsize, and large-car segment prices slipped by as much as 4.4% since last December.

  • In contrast, on an annual basis, the prices of used large pickups rose by 7.2% and used midsize utilities were up by 4.2%.

  • The lion's share of dealer purchases in auction lanes were 2014-model-year vehicles.

  • NADA Used Car Guide predicts that prices of vehicles up to 8 years old will dip by 2.7% in May and by 2% in June.

  • Trade-in values at the dealership also fell in May by 1.7% from April.

New-Vehicle Sales Trends

  • Crossover SUVs and pickups have helped maintain healthy new-vehicle sales for 15 consecutive months through April, according to the NADA Guide, which aligns with similar analysis by LMC Automotive and J.D. Power.

  • Detroit-based automakers' sales rebounded in April, with strong results for Fiat Chrysler Automobiles (FCA), General Motors, and Ford Motor Co.--all up 6% from a year ago.

  • Big news for GM was accelerated demand for the redesigned Cadillac Escalade and strong sales of Chevrolet's utilities and pickup trucks. Redesigns fueled Ford's gains--the new Mustang and the Edge--as well as the new Lincoln MKC premium midsize utility.

  • New products also primed the European nameplates' deliveries--strong sales performers included the Audi A3 sedan and Audi utilities; BMW's 3-Series and 5-Series; Mercedes-Benz's new C-Class and GLA-Class compact premium SUV.

  • Asian brands posted mixed results. Hyundai sales edged up and independent Subaru sales soared. Utilities boosted Nissan and Infiniti deliveries, while Toyota's numbers were bolstered by SUVs--RAV4, 4Runner, and Highlander--and pickups. Yet, Acura's all-new TLX and blow-out sales of the outgoing Pilot could not offset Honda's drop in April.

Automakers Hold Line on Incentives in First Quarter

  • Incentives moved up slightly in April, according to NADA Used Car Guide's update. Automakers increased incentive spending in April by 3.2% from a year ago to an average $2,671 per unit.

  • Buick was the non-premium brand that relied most on incentives, while Chrysler brand spent the second-highest amount of cash to sweeten sales. Fiat and Ram also raised their incentive spending significantly in April.

  • Other notable incentive spenders in April were: Volkswagen, Chevrolet, and Nissan, while Subaru, Toyota, and Honda spent the least on incentives to move their new models. Cadillac spent the most among premium brands, followed by Lincoln, Infiniti, and Jaguar.

News about Trade-In Values

  • Trade-in values in May's edition of the NADA Official Used Car Guide decreased by 1.7% from values in the April Car Guide.

  • Car values were reduced by an average of 1.1%, which was lower than the truck segment's combined average of 2.6% even with relatively cheap fuel.

  • April was the second consecutive month where cars outperformed trucks.

  • Overall for the month of May, luxury vehicle values on average decreased by 3.5%.

  • Mass market, or mainstream, vehicle values were reduced by 1.4%.

  • Sports cars performed well and values were lowered the least--by just 0.3%.