While the past year showed stronger-than-expected retention rates overall, Black Book’s Used Vehicle Retention Index still fell 0.7 percent from 115.0 to 114.1 last month, following a rise in November.
In addition to the first decline in the last four months, this is also the lowest tally for December since 2010 when the Index was at 113.3. However, as the economy improved, the index rose back up to 123.0 in 2011, according to Black Book.
The Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on 2- to 6-year-old used vehicles, as a percent of original typically-equipped MSRP.
The index rose for four straight months, (August, September, October and November) before falling as a result of higher depreciation recorded for both car and truck segments, according to Black Book.
Black Book explained that last month, higher depreciation on vehicle segments was led by the full-size luxury CUV/SUV (-2.0 percent); mid-size luxury CUV/SUV (-1.9 percent); full-size car (-1.7 percent); compact crossover (-1.7 percent); and compact car segments (-1.4 percent).
“While December finished on a slightly down note for the Index, the overall year in 2017 was filled with stronger-than-expected retention rates, mainly due to a continuously health economy and vehicle replacement activity following the major hurricanes,” said Anil Goyal, senior vice president of automotive valuation and analytics for Black Book. “We expect to see depreciation rates return to normal levels in 2018, even though the recent tax changes may incentivize some additional spending, particularly during the spring tax season.”