Depreciation for compact and midsize vehicles is expected to worsen this summer, according to NADA's Used Car Guide Industry Update.

May’s 1.3% decline marked the first drop in used-car prices since late last year, according to NADA. The decline ended a four-month period in which vehicle appreciation averaged 2% per month. Prices dropped 1.3% in May and midsize cars and midsize vans fell the hardest.

NADA projects that softening seasonal demand will continue to pressure down used-vehicle prices for all segments in the coming months, but falling gasoline prices will lead to more pronounced depreciation for compact and midsize cars.

As a result, overall depreciation for June’s edition of the NADA Official Used Car Guide is projected at 1.6% relative to May, with projections for compact and midsize cars most severe at 2.5% and 2.8%, respectively. Downward adjustments for remaining segments ranged from 0.8% to 1.4%.

Combine NADA’s gasoline projections for July — which amount to $3.55 per gallon — with a cut in demand, and it's likely that compact and midsize car depreciation will be more dramatic in July than what is anticipated for June, NADA said.

Source: NADA