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Used Vehicle Retention Weakens in December: Black Book

January 05, 2018

An index that tracks wholesale used vehicle values fell in December for the first time in four months at a time when the used vehicle market typically shows some weakness. It also reinforced 2017 as a growth year for used vehicle sales.

The Black Book Used Vehicle Retention Index fell 0.7% to 114.1 in December from November levels. It's last decline came in August. The index tracks sales of two- to six-year-old vehicles.

The decline was a result of higher depreciation among car and truck segments. Vehicle categories that led the depreciation included full-size luxury CUV/SUV (2.0%); mid-size luxury CUV/SUV (1.9%); full-size cars (1.7%); compact crossovers (1.7%); and compact cars (1.4%).

The index's 114.1 mark was the lowest in a December since 2010 when it reached 113.3. The used vehicle market began a run of strong retention that year from higher consumer demand and low supply levels, and finished December 2011 with a mark of 123, according to Black Book.

"While December finished on a slightly down note for the Index, the overall year in 2017 was filled with stronger-than-expected retention rates, mainly due to a continuously health economy and vehicle replacement activity following the major hurricanes," said Anil Goyal, Black Book's senior vice president of automotive valuation and analytics. "We expect to see depreciation rates return to normal levels in 2018, even though the recent tax changes may incentivize some additional spending, particularly during the spring tax season."

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