Vehicle depreciation is forecasted to reach 17.8 percent in 2017, slightly up from the 17.3 percent mark recorded in 2016, according to a recent report from Black Book. Average pre-recession annual depreciation trended between 16 percent and 18 percent.Between 2011-2015, average annual depreciation fell between 8.3 percent and 13.2 percent. Black Book believes much of the pent-up demand fueling both new and used vehicle sales has been spent, resulting in a rising level of vehicle depreciation expected in 2017. What’s more, a continued increase in lease activity along with higher incentives that began in 2016 spell more pressure on residual values, which are also expected to continue falling in 2017. The Black Book Used Vehicle Retention Index is calculated using Black Book’s published Wholesale Average value on 2- to 6-year-old used vehicles, as percent of original typically equipped MSRP. The index is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage, condition, segment mix and inflation (MSRP). The index lost 6 percent in 2016. The index is expected to continue its slow decline in 2017.