Used SUVs and pickup trucks are enjoying favorable market conditions, but lenders shouldn’t over-rely on those two segments, Anil Goyal, vice president of automotive valuation and analytics at Black Book, told Auto Finance News.
“The market today on the whole has been doing really well, we have 12% depreciation year over year overall,” he said. “But if you drill down a little bit, you find that depreciation has been really high on smaller cars and electric cars, while it has been really low on pickup trucks and SUVs.”
A recent weekly market insights report from Black Book Auto indicated car prices decreased by an average of 0.60 percent or $67 from the previous week, while overall truck values decreased by 0.35% or $56. Lenders have been increasingly tapping those segments, often times forgetting to diversify their portfolio with some of the not-so-hot products, Goyal said.
“Those segments are hanging on so far as the economy continues to improve,” he said. Specifically, gas prices and the improving housing economy are holding up the pickup truck sector, but as the supply increases and the demand matures, those segments will cool down, Goyal said, which can potentially pump up the depreciation rates. “We don’t expect the gas prices to increase, in fact gas prices are going to be very timid, but we do expect the supply to continue to increase in SUV and pickups at least for the next year.”
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