What’s causing the increase in depreciation?
New car sales are expected to rise slightly this year, so more cars are likely to be traded in. In addition, a large amount of leased car returns are expected, further increasing the supply of used cars and causing their prices to fall.
Cars and trucks differ
Last year’s lower rate of depreciation was largely fueled by trucks. Their depreciation rate was only 9.2% in 2015, compared to a rate nearly twice as high – 18.2% - for cars. Depreciation varied significantly across segments in 2015. Trucks ranged from 2 to 23% across segments, while car segments ranged from 14 to 22%. This disparity widened toward the end of the year, and it’s expected to remain during 2016.