Retained Vehicle Values Are Dropping, According to Kelley Blue Book

Higher retail prices (MSRPs) for vehicles are not translating into increased retained values for 1- to 3-year-old vehicles at auction, a new report from Kelley Blue Book finds.

According to KBB’s Blue Book Market Report for the third quarter of 2016, auction values for used 1- to 3-year-old vehicles declined 4.6 percent, or roughly $807, during the quarter.

This is happening despite average auction volume remaining at higher levels than in previous years.

In fact, volume in the third quarter was roughly 11 percent higher year-over-year, due to sustained high levels of lease-returned vehicles.

Yet, values are not being retained.

KBB said that the compact and mid-size car segments have both under-performed when compared to the overall market average year-to-date, declining 9.7, 10 percent higher than the next best segment – performance cars.

The full report is available at HERE.

What Are the Lessons for Consumers?

If this report is any indication of where things are heading, it may be better to lease rather than to purchase.

In other words, if retained values continue to decline, purchasing at todays inflated prices – then trading in or selling at depressed prices – may result in more of your money lost than if you had just leased the vehicle, and kept its residual value as the responsibility of the car company.

It’s safe to say that many of today’s customers will be getting a rude shock at trade-in time.