STAMFORD, Conn. -

Used-car prices remain “stronger than expected” and have edged up from year-ago levels.

But they could fall by nearly 6 percent over the next two years, according to the latest RVI Quarterly Risk Outlook report, which cited a plethora of inventory and incentives as the key drivers.

As for the latest pricing activity, May’s real used-car prices were up 1.0 percent sequentially and 2.1 percent year-over-year.

However, RVI’s real used-vehicle price index is projected to decline 0.7 percent for full-year 2018, then show year-over-year declines of 3.6 percent and 1.2 percent, respectively, the next two years.

RVI anticipates that by 2020, pre-owned prices will be 5.9 percent softer than they are right now.

“The increasing supply of used vehicles and steady growth of incentive activity will continue to put downward pressure on used-vehicle prices,” RVI Group said in the report. “We expect lease penetration to decline from record highs over the next two years.

“As a result, this supply of off-leased vehicles (record highs) will enter the market, and drive further declines in used-vehicle prices,” the firm said.

The supply of off-lease vehicles should remain on the rise through 2020, RVI said, thanks to an abundance of leasing in recent years.

Though not at peak levels seen a couple years ago when rates exceeded 23 percent, first-quarter lease penetration was up from the fourth quarter and reached 22.2 percent. The next few years, however, should show some slowdown in leasing.

As for RVI’s metric for off-lease volume, there was a 12.1-percent year-over-year hike in the lease supply index during May. For full-year 2018, RVI is projecting a 13.4-percent gain, followed by 16.0-percent hike next year and a 4.5-percent uptick in 2020.

It’s not until 2021 that RVI anticipates a decrease in its lease supply index. That’s when many of the leases written now will re-enter the market; and so far this year, lease penetration has decreased for the majority of brands, RVI said.

The company’s used-vehicle stock index is expected to show year-over-year gains of 6.8 percent, 3.8 percent and 3.4 percent in 2018, 2019 and 2020, respectively.

Then on the new-vehicle front, RVI anticipates that levels of incentives (as percentages of MSRP) to climb this year and the next three. Incentives were at 10.1 percent of MSRP in May and are likely to reach 10.2 percent for full-year 2018 and then 10.3 percent by 2020 and 10.4 percent in 2021, before tailing off.