Historically, vehicle values tend to depreciate from month to month. As such, the predicted value of any vehicle would be lower than the value of that same vehicle the previous January. In early 2020, vehicle values were trending as the industry normally expected. Then, in March, COVID-19 altered the anticipated trends of the automobile industry. As a result, all major vehicle valuation services, not just National Automobile Dealers Association (NADA), indicated increased market values between January 2020 and January 2021 (1). Just over the summer of 2020, prices increased over 10% for the US used car market as a whole. Several key market events, beginning as far back as mid-2019, played a part in the values established in January 2021.
These events include but are not limited to:
- In March of 2020, The Federal Reserve cut the interest rates to near 0%. These unprecedented low interest rates, on both new and preowned vehicles, allowed consumers to purchase vehicles sooner than they would have in the past. A strong demand means higher prices.
- The “COVID-19” related closing of certain auto manufacturing plants for the necessary production of ventilators and other Personal Protective Equipment caused a further reduction in inventory.
- Large fleet companies (E.g.: rentals agencies and car services) chose not to replace inventory adding to the shortage of preowned vehicles in the market.
In accordance with The Code of Virginia 58.1-3503, the County of Goochland Commissioner of the Revenue uses the “Clean Trade-in Value” established by NADA as fair market value. The Commissioner’s Office will make adjustments for vehicles exceeding the mileage indicated in the pricing guide.
Reference:
1. General Assembly of Virginia-. Code of Virginia (1950), Title 58.1-3503(A) (3). Richmond, VA: Lexis Nexis, 2017.
2. National Automobile Dealers Association. Guidelines, NADA Used Car Guide Industry Update. McLean, VA: NADA, January 2021.
3. General Assembly of Virginia. Code of Virginia (1950), Title 58.1-3515. Richmond, VA: Lexis Nexis, 2017.
