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Used Car Depreciation Slows, Trucks Maintain Their Value Best

By Hal M. Bundrick

NEW YORK (MainStreet) If you're thinking about buying a new car, here's some good news: your used vehicle is likely holding its value better this year and will help you score a sweeter deal, especially if you're looking to trade-in a truck.

Trade-in values for 2006 to 2013 model year vehicles were reduced by a cumulative average of 15.9% in 2013, a slight improvement from 16.1% in 2012, according to the just-released NADA Official Used Car Guide.

And light truck owners have seen depreciation of just 13.5% in the past year, due to a combination of lower supply and moderating gasoline prices. Overall, cars have seen values back down 17.6%.

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Luxury car trade-ins have seen the most depreciation: dropping by an average of nearly 21%. Large SUV, as well as midsize and full-size pickup truck values slipped by an average of only 8.4%.

<"p>Demand for both new and used full-size pickup trucks was extremely high last year," says Jonathan Banks, executive automotive analyst of the NADA Used Car Guide. "The segment is unique because it supports both consumer and commercial needs, and the fact that used full-size pickups lost about 8% of their value last year is clear evidence that America's love affair with the segment remains strong."

Prices for used cars and light trucks have risen for five straight years, as December closed out 2013 with prices 0.4% higher than in 2012.

"A stronger economy, pent-up demand and favorable credit conditions underpinned used vehicle price strength in 2013," adds Banks. "These positive factors helped to balance downward price pressure caused by an increase in the supply of late-model used vehicles, which began to grow again in 2013 following a five year slide from a falloff in new vehicle sales and trade-ins during the recession."

NADA projects used vehicle prices for 2014 to begin the year flat or slightly down, before rising by 2.5% to 3% through March. Prices are currently 18% higher than they were prior to the start of the recession in 2007.

"Expanding late-model supply should translate into more severe depreciation over the remainder of the year," the NADA report says. "As a result, used vehicle prices are expected to fall on an annual basis for the first time since 2008; however, economic growth, lower unemployment and a highly competitive credit environment are expected to minimize the negative influence of higher supply."

Written by Hal M. Bundrick for MainStreet

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