If economists and remarketing experts are correct, 2017 will finally be the year of significant declines in used-vehicle prices.
It's a trend that has been a long time coming. Similar predictions were made in 2015 and 2016 by those same experts. Instead, used-vehicle prices held relatively stable at or near record levels for the past few years.
Various indexes that monitor used pricing showed slight dips in used values last year, though they remain well above pre-recession levels. The Manheim Used Vehicle Index indicated pricing slipped only slightly in 2016, while the NADA Used Car Guide Vehicle Price Index fell about 4 percent last year from record levels the previous several years.
Tom Kontos, chief economist at ADESA, said a steady stream of off-lease vehicles returning to the market, combined with a growth in new-vehicle incentives, will combine to finally push prices lower.
"I don't want to say the market hasn't been resistant, but we've been seeing some softening already," Kontos said. "The softening in the market has been there, but it's been masked by other factors."
Strong demand for new and used light trucks, a growing market for certified pre-owned vehicles and younger -- hence, higher-priced -- vehicles coming off lease have disguised a lot of the downward pressure on prices in the used market.
"If the trucks in that mix are doing better than the cars," Kontos said, "it will impact all the averages."
Beginning this year, those factors will likely not be enough to mask pricing declines in the market, he said.
"One thing that's been largely absent to date has been any significant growth in new-car incentives. Manufacturers have been more disciplined in applying new-car incentives. That is the area that we already see evidence of change," he said.
Incentives are likely to climb again in 2017 as automakers look to boost a new-vehicle market at risk of flattening or declining. Automakers could especially place more incentives on cars, which accounted for just 39 percent of light-vehicle sales in 2016.
In addition, weaker used-vehicle prices would reduce trade-in values, making it more difficult for some consumers to afford a new car or truck. Through October, 38 percent of new-car sales and 28 percent of new-truck sales in the U.S. included a trade with negative equity, J.D. Power data show.