COVID-19’s Impact on the Vehicle Valuations of 2022

The following information is intended to provide insight about the updated NADAvehicle values for 2022.

 Over the past two years, we have seen vehicle values increase due to the pandemic. This is true for 2022 as well.  Some values have increased dramatically.  The car tax relief percentage will most likely decrease.  These factors will result in taxpayers paying a higher amount of tax on a vehicle that is a year older and has higher mileage than previously.  The reason behind the increase is still the same.  Please refer to the following information previously established.

 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⁾.  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 and 2022. 

 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. In states that were closed due to COVID-19, buyers sought vehicles from outside of their own state of residence.  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 Brunswick County Commissioner of the Revenue uses the “Clean Loan Value” established by N.A.D.A. as fair market value.  No additional action has been taken to offset the increase.

 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.