Sub-Compact Car Retention Rates Fall 30% in 5 Years

Sub-compact car retention rates for model-year vehicles older than two years has steadily declined in the month of August in the last five years, with 2014-model year vehicles falling about 30% more than comparable 2010-model year vehicles.

For 2010-MY, the retention in August 2012 for sub-compact cars was 63%. In comparison, for 2014-MY, the retention this August dropped to 44%. This is due to the increasing used supply and eroding demand of the segment, according to the Aug. 29 Black Book Market Insights report.

Meanwhile, the report also noted slight weakening in prices on crossovers and SUVs between between Aug. 20 to Aug. 27., even though demand has remained at healthy levels. Conversely, car segments showed a little more retention strength compared to what they’ve shown throughout summer.

Overall car segment values decreased by 0.47%, much lower than the depreciation rate of 0.73% seen in the previous three weeks. Full-size cars, sporty cars, and prestige luxury cars declined the most by 0.93%, 0.80%, and 0.59%, respectively.

“The steeper depreciation seen recently in the car segments slowed last week while the depreciation on crossovers and SUVs accelerated,” said Anil Goyal, senior vice president of automotive valuation and analytics.

Overall truck segment values decreased by 0.51%, which is higher than the depreciation rate of 0.36% seen in the previous three weeks.