Small cars benefited from the tax season this spring, as four car segments experienced an average 3% increase to their wholesale values. 
 - Photo by Eric Gandarilla.

Small cars benefited from the tax season this spring, as four car segments experienced an average 3% increase to their wholesale values. 

Photo by Eric Gandarilla.

As the summer selling season approaches, a look back at how wholesale values faired through the spring season finds that four mainstream car segments saw their wholesale values rise.

Subcompact cars, compact cars, mid-size cars, and full-size cars saw their wholesale values respectively rise by 2.6%, 5.3%, 3.1%, and 1% through the period between Feb. 1 and May 1, noted Anil Goyal, executive vice president, operations for Black Book.

Based on the performance of the sedan segment in recent years — as consumer demand has shifted toward SUVs and crossovers — these sedan segments were not expected to perform as well as they did, as values for these segments have dropped as values for larger utility vehicles have risen.

Tax refunds were a large part of why these sedan segments performed as well as they did. Tax refunds typically reach consumers during the spring season, and they’re often immediately used to purchase a used car or truck, Goyal noted.

As wholesale prices for sedans have dropped in recent years, they have now reached a point where they present great value to wholesale buyers. They’re affordable enough to purchase with their tax rebates, and late-model versions offer many of the technological features that buyers want.

In January 2018, the average wholesale value of a 2015 model year vehicle was 51% of its typically equipped MSRP. This, according to Black Book, was a year-over-year drop in retention. In January 2017, the average wholesale value of a 2014 model year vehicle was 52% of its MSRP.

The three-year retention for vehicles sold in 2018 is expected to fall even further — to 48% — by 2021, according to Black Book.

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