NADA: Higher Gasoline Prices Stir Little Change in Used-Vehicle Prices in August
In a reversal, compact and mid-size car prices depreciate more than light trucks during the recent spike in gas prices.
MCLEAN, Va., Aug. 29, 2012 /PRNewswire-USNewswire/ — The recent 42 cents spike in the price of regular grade gasoline has had a minimal impact on used-vehicle prices in August as consumers are choosing to stay the course with their current vehicles, said Jonathan Banks, senior analyst with the NADA Used Car Guide.
“This time around, rising gas prices have done little to shift consumer demand for late-model used vehicles. Buyers have become more accustomed to dramatic swings in gas prices,” Banks said. “As long as fluctuations are similar to what’s been seen in the past, consumers will stick with vehicles that best fit their lifestyles, rather than make unnecessary sacrifices for improved fuel economy.”
In 2011, used-car prices increased significantly and light-truck prices decreased when gas prices grew from $3.07 a gallon in early January to a peak of $3.96 in May, according to the Energy Information Administration. Fast forward to spring 2012, gas prices followed a similar course toward a peak of $3.94 a gallon in April, but used-vehicle prices took a different path with car price appreciation much less than the prior year. Light-truck prices also remained relatively stable and actually increased moderately in some cases.
From April to July, the 3% average rate of depreciation for compact and mid-size cars has led all others segments by a wide margin, while prices for mainstream light-truck segments have averaged a decline of 1.6%, says the NADA Used Car Guide.
In dollar terms, the average price of a 3-year-old compact car fell by $1,350 over this period. Hybrid car prices have taken an even more extreme hit since the spring. For example, prices for 3-year-old compact hybrids, such as the Toyota Prius, fell by nearly 18% from April to July or $2,718. By comparison, prices for large pickup trucks, such as the Ford F150, declined by only $525.
So far in August, cars have continued to depreciate more than light trucks. Compact and mid-size car prices fell by 2.2% and 2.0%, respectively, while prices for utility vehicles of all sizes and large pickup trucks barely slipped at an average of 0.5% compared to July. Prices for luxury cars and luxury utility vehicles prices fell by 1.8% and 1.5%, respectively, in August compared to July.
“The most recent jump in gas prices is largely responsible for slowing down the rate of depreciation for cars compared to the prior three months, but by historical standards the improvement has been mild,” Banks added. “Even more notable is the continued price strength of light trucks in August. So far, higher gas prices have not had a noticeable impact on the demand for light-truck segments.”
As spikes in gasoline prices occur more frequently, Banks suggests that used-vehicle buyers are becoming increasingly desensitized to dramatic and rapid changes in fuel costs at the pump.
“We should see the volatility of used-vehicle prices diminish as gasoline prices rise and fall in the future,” he said.
Click here for Banks’ Used Car & Truck Blog.
About the NADA Used Car Guide
Over a 79-year history, the NADA Used Car Guide has earned its reputation as the leading provider of accurate vehicle valuations and auction data. NADA offers a wide range of vehicle values, including those for used passenger car, light-duty and commercial truck, motorcycle, classic car and many more specialty vehicles. Available in a variety of delivery methods, NADA’s products and services are used daily throughout the auto, finance, fleet-lease, government and insurance industries. For more information, visit www.nada.com/b2b.
The NADA Story
The NADA story began in 1917 when 30 auto dealers traveled to the nation’s capital to convince Congress not to impose a luxury tax on the automobile. They successfully argued that the automobile is a necessity of American life, not a luxury. From that experience was born the National Automobile Dealers Association. Today, NADA represents nearly 16,000 new-car and -truck dealers, with 32,500 franchises, both domestic and international. For more information, visit www.nada.org. Follow NADA on Facebook and Twitter.
SOURCE National Automobile Dealers Association