Prices For Fuel-Saving Used Cars To Drop
Prices for fuel-efficient used vehicles are falling with lower gas prices, the National Automobile Dealers Association said Tuesday.
The resale values of many compact and midsize vehicles are expected to drop 5 percent in June, a trend that will continue this summer, said Jonathan Banks, senior analyst with the National Automobile Dealers Association Used Car Guide. Prices on those used vehicles made double-digit percentage gains from January through May.
Nationwide, gas prices are now averaging $3.71 a gallon — down 3.5 percent from a year ago — and well below the $3.94 a gallon average in April.
Auto analysts expect light trucks — SUVs, pickups and minivans — will make up a bigger share of total auto sales in May as lower gas prices have brought truck buyers back to showrooms. Gas prices below $4 a gallon also make it harder for dealers to sell electric vehicles and plug-in electric hybrids.
“The trend of rising prices for used cars will reverse course in June because of declining gasoline prices combined with a normal seasonal slowdown in consumer demand for used cars,” Banks said.
Overall used-car values will decline about 2 percent, while truck values will fall about 1 percent or half of the amount of cars, according to the June edition of the NADA Official Used Car Guide.
Prices for used compact and midsize cars will fall an average 2.4 percent, and many used cars will see larger declines. The value of a 2009 Honda Civic Sedan 4D LX, which appreciated $1,200 or 11 percent this year, will fall $600 in June.
After increasing in value by $2,350 this year, prices on the 2011 Toyota Prius Liftback 5D will decrease $900 in June, according to the NADA Used Car Guide.
“Rapid depreciation for hybrid vehicles is not uncommon after surging gasoline prices reach a peak and then begin to quickly fall,” Banks said. “During periods of rapidly changing gasoline prices, values of hybrid vehicles become more volatile because consumer demand for hybrids rises and falls along with the price of gasoline.”
When gas prices rose during the first four months of 2011, for example, the 2009 Toyota Prius increased in value by about $4,500 from January through April of that year. In the fall of 2011, the Prius dropped in value by $4,800.
Amid high gas prices, the Toyota Prius family of vehicles became the world’s third best-selling car line in the first three months of the year, Bloomberg News reported. Toyota has sold more than 4 million hybrids worldwide since 1997 — including 1.5 million in the United States — most of them Prius models. The Prius accounts for 65 percent of all hybrids sold in the United States.
Still, used car prices remain strong because during the past year an inventory shortage of popular models has resulted in fewer off-lease vehicles returning to the market and fewer trade-ins. Americans have held onto cars longer.
And because Americans bought fewer vehicles than normal from 2009-11, there are fewer used cars for sale.
Alec Gutierrez, senior market analyst at Kelley Blue Book, said overall used car prices are about 15-17 percent higher this year than in 2009 and remain near historic highs set last year.
He said the first small declines in used car prices are likely early next year. It will not be a “severe correction,” Gutierrez said, but a 2-3 percent drop in value.
With easy credit and some automakers offering zero percent financing for up to 72 months, consumers are back in showrooms. New car sales are up about 10 percent this year.
“Consumers are realizing they can get more for their trade-in,” he said.
NADA estimates that the used supply of vehicles less than 5 years in age has declined by 14 percent since 2009.
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