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Prices Move Higher

higherpricesUsed-vehicle prices continued an upward trend in 2012, increasing for the fourth consecutive year, according to the latest Guidelines report from NADA Used Car Guide.

As a result of Hurricane Sandy, the average price of vehicles up to eight years old increased by 0.1 percent in December compared to November, an improvement from the 2 to 2.5 percent rate of decline typically expected in the month of December.

December's strong showing increased used-vehicle prices by 1.2 percent in 2012, compared to 2011. While not as remarkable as the 7.6 percent increase in used-vehicle prices in 2011, the past year marked four consecutive years of used-price growth and placed prices 32 percent higher on average than 2008.

From January through December, the NADA Used Car Guide's average trade-in values for 2005-2011 model year vehicles depreciated by a historically mild rate of 14.1 percent. This means that on average, a car or truck with a trade-in value of $15,000 in January's edition of the Used Car Guide lost $2,114 of its value by the end of the year or less than $200 per month.
Higher trade-in equity on used vehicles will help encourage the release of pent up demand for new vehicles.

While the annual loss of value for the market as a whole was relatively mild, depreciation for certain vehicle segments was slow.

Topping this list was the large pickup segment, where higher new-vehicle prices, fuel-efficiency improvements and modest gains in housing and construction increased used demand and held depreciation to 8 percent over the course of the year, which is about half of the 15 percent rate of depreciation that is normally expected just from aging. Putting last year's result into dollar terms, a $25,000 used pickup lost only $183 of its value per month over the course of the year.