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Slower New Vehicle Depreciation Expected To Continue

In recent years, low inventory levels stemming from various supply chain shortages has sent both used and new vehicle prices soaring to new record levels, which has impacted the market in a number of ways. For example, new vehicle depreciation rates have largely slowed as a result of the fact that vehicles, in general, are harder to find and more valuable. In the world of The Blue Oval, some models are still depreciating at a rapid rate – a list that includes the Lincoln Navigator and Ford Expedition SUVs, but not the Ford F-150 and Ford Mustang, which have some of the slower depreciation rates in the industry. Regardless, while one might think that improving inventory and falling prices would reverse this trend, some don’t believe that will be the case, according to CNBC.

“The prices of used vehicles were actually increasing for about two years,” said Alex Yurchenko, chief data science officer at Black Book and Motor. “We’ve never seen anything like that for the market.” As a result, new vehicles are holding onto their value at a rate of 10 percent more – on average – after three years compared to before the pandemic, and many analysts expect that to continue, even as the market is seemingly in a slow state of correction.

As CNBC points out, new and used vehicle inventory levels remain low by historical standards, and prices are still quite high, even after a period of months in which average transaction pricing declined. This is especially true as incentives make a comeback – making new vehicles a more attractive purchase – coupled with higher wholesale values, which further narrows the gap between new and used vehicle pricing.

Historically speaking, a steady flow of new vehicle inventory helps drive the prices of used vehicles down, but with inventory levels remaining a bit low overall, that isn’t currently the case. Coupled with strong demand and a desire by automakers to sell fewer vehicles with higher profit margins, it seems as if these factors will help keep new vehicle depreciation a bit subdued by historical standards, at least for the foreseeable future.

We’ll have more on the state of new vehicle depreciation soon, so be sure and subscribe to Ford Authority for comprehensive Ford news coverage.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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Comment

  1. Daniel Akers

    Drop prices of the
    F 250 and the engine choices 2.7!liter also study GM more why can they have lower rates and good looking trucks ie the entire line up at lower rates, the new 2024 in my opinion will not keep up. Lower your prices on Ford escape is to high in price.

    Reply

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