A rising supply of used pickups coupled with aggressive pricing for new models is expected to cause a weakening in values in the wholesale market, according to new data from Black Book.
"Black Book has been tracking accelerating pickup truck depreciation, especially since incentives on leases began to grow last year," said Anil Goyal, Black Book's senior vice president of automotive valuation and analytics. "Furthermore, pickup truck retention rates will continue to decline in the coming years from the current strong performance they've enjoyed recently."
Full-size pickup trucks are now averaging 12.4% annual depreciation, a significant increase from a year ago, when they were depreciating at an average rate of 3.1%. Depreciation of small pickups has also accelerated. It has reached an annual rate of 8.9%, an increase from 2.9% a year ago.
While annual depreciation has increased, retained values have fluctuated. Annual depreciation is a percentage change in value of a 2- to 6-year-old vehicle over one year, while retention is the wholesale value after two years as a percentage of a new typically equipped vehicle's MSRP. The change in the depreciation rate is typically higher than the retention rate because it's calculated on a lower amount.
Full-size pickups have increased their average retention from 2010, when they averaged 56% to October 2016, when a three-year-old vehicle retained an average of 64% of its value. Pickup retention rates reached 59% in 2011, 64% in 2012, 66% in 2013, and 64% in 2014, according to Black Book.
The retention rate of full-size pickup trucks has climbed strongly in the past few years until this year when it declined slightly by 2 percentage points. For the 2010-MY, the retention in October 2012 was 56%. In comparison, for the 2014-MY, the retention in October rose to 64%.
Pickups today continue to be among the vehicle segments with the best retention, but increased supply could weaken their position further in the future, according to the data provider.
Originally posted on Automotive Fleet
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