Declining used-vehicle prices this year will benefit retailers selling late-model SUVs and crossovers but could pinch dealerships' volumes and margins on new light trucks, analysts say.
More SUVs and crossovers are coming off lease in 2018 than in previous years. That means less of a glut of used cars and relief from years of sky-high prices on SUVs and crossovers in the used market.
The time lag in vehicles returning from three-year retail leases has created a mismatch in the used market in recent years as U.S. consumers' demand dramatically shifted to light trucks from cars. Until this year, returning used vehicles were far more car-heavy than the new-vehicle sales mix. As a result, used-truck prices held relatively firm while used-car prices slumped. But in 2018, half of off-lease vehicles are expected to be light trucks.
"It has been a tale of two markets but now it's a tale of one market," said Tom Kontos, chief economist for KAR Auction Services. With overall off-lease volume expected to top 3.9 million vehicles this year, he expects overall used prices to decline.
"We'll see more parity on car and light-truck prices than before," he said. "We've had a bifurcated market, but less so now. All segments will get some price pressure, but it'll be gradual. It'll take a long time to level off."