Since the car sales have been rising in U.S. for 7 years, of course that the value of used cars we’ve got parked in our garages would dent. There are hundreds and thousands of new cars rolling out of dealerships lots and this means they instantly become used cars.
The secondary market is glutted and the pace of depreciation is rapidly accelerating. Your not-that-old car might not be a clunker quite yet, but it's probably a lot closer than you think. The average used car lost 17 percent of its value in the past 12 months, dropping from $18,400 to $15,300. That annual depreciation figure has been increasing steadily, too. The average used car today depreciates nearly twice as fast at it did in 2014, when the annual rate was just 9.5 percent. Certain segments are shedding value even more quickly. Subcompact cars, such as the Honda Fit, and large sedans, such as the Chevrolet Impala, are depreciating faster than average. Big SUVs, vans, and pickups are holding their value a little better, and imports tend to drop more quickly than domestic models.
The problem, of course, is supply. Seven consecutive years of increasing U.S. auto sales have put a glut of vehicles on the road. What's more, an increasing share of those sales came with a lease, so there's now a rising tide of machines flowing back onto the market when their three-year contracts run out.