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IRVINE, Calif., and McLEAN, Va. — Though according to NADA
Used Car Guide's analysis, new-vehicle incentives and rebates, as well as
declining prices on used vehicles, are helping boost auto sales this summer, it
seems consumers are not quite as willing to put out the big bucks for a used
vehicle as values continue to falter.

Kbb.com explained that "luxury vehicles have suffered at
auction as consumers have been less willing to pay premium prices for a used
vehicle as values drop 7 to 10 percent from one year ago, surpassing the
average industry decline of 5.4 percent."

And as used values continue to spiral downward, "luxury
vehicles have underperformed the market by a significant margin due to their
high price point," Alec Gutierrez senior market analyst, automotive insights at
Kelley Blue Book.

Also contributing to the lack of interest in used luxury
vehicles is the "attractive" finance and lease deals OEMs are currently
offering on many new high-volume luxury vehicles.

Kbb.com offered these examples: "BMW currently is offering
the 328i coupe for $359 month on a 36-month lease, while Mercedes-Benz is
running a similar promotion for the C-Class at $369 per month on a 24-month
lease."

And the battle to turn consumers' eyes back towards luxury
vehicles may be a problem for those specializing in new luxury units, as well.

"In addition to competitive new-vehicle pricing swaying
luxury buyers, the improved quality and amenities offered in most mainstream
vehicles also are motivating buyers away from the entry-level luxury segment,"
KBB officials noted.

"Consumers today may be inclined to consider a loaded
Hyundai Sonata or Toyota Camry rather than an Audi A4 or BMW 3-Series due to
the more attractive price point and comparable feature set," they continued.

Another factor in the dwindling popularity of luxury
vehicles is, of course, "stagnant" economic growth.

"With economic growth still stagnant and unemployment stuck
above 8 percent, we likely will find more and more buyers opting to purchase
fully loaded standard sedans versus their premium priced luxury counterparts,"
the company concluded.

NADA: New-Vehicle Incentives, Dropping Used-Car prices
‘Boost' Sales

And in recent news from NADA UCG, the organization also
cited new-vehicle incentives, as well as dropping used vehicles prices as
contributing to high auto sales during the last few months of the season.

"The end of summer is typically a good time of the year
to shop for new and used vehicles," said Jonathan Banks, senior analyst
with NADA UCG.

"Dealers and manufacturers are offering incentives and
rebates to sell remaining inventory at dealerships and to make room for new
model year vehicles arriving this fall," Banks added.

And just how much are these used units dropping in price?

According to NADA UCG, average retail-prices for used cars
and light trucks up to 5-years-old experienced the greatest monthly decline
this year, dropping 3.8 percent this month.

And the organization expects the decline won't stop there.

"Over the next few months, we expect to see an acceleration
in the decline of used-vehicle prices that usually begins as the summer season
winds down," said Banks, in the August edition of Guidelines, a monthly report
that analyzes trends and pricing information on both the new- and used-vehicle
markets.

"New-vehicle incentives and discounts are another seasonal
factor that typically results in used-vehicle price declines in late August and
September," he added.

And what's in the cards for the coming season?

NADA UCG predicts that used-vehicle prices on average will
drop between 3 percent and 3.5 percent in September.

"In monetary terms, a used car worth $12,000 today will drop
by more than $400 by the end of the third quarter," officials added.

But even though prices are spiraling downward, NADA UCG's
Banks noted that "prices are still at historically high levels"

"While steady price declines are making many late-model used
vehicles more affordable to purchase, it's important to note that
higher-than-average trade-in values are still providing consumers with built-in
equity to get better deals on either a new or used car or truck," he concluded.