McLEAN, Va. — The price of regular grade gasoline has spiked 42 cents, but the NADA Used Car Guide said the rise has had a minimal impact on used-vehicle prices in August. The firm’s senior analyst said that’s because consumers are choosing to stay the course with their current vehicle.
“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,” said the NADA Used Car Guide’s Jonathan Banks. “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 percent 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 percent, according to the NADA Used Car Guide.
In dollar terms, the average price of a three-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 three-year-old compact hybrids, such as the Toyota Prius, fell by nearly 18 percent 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 percent and 2 percent, respectively, while prices for utility vehicles of all sizes and large pickup trucks barely slipped at an average of 0.5 percent compared to July. Prices for luxury cars and luxury utility vehicles prices fell by 1.8 percent and 1.5 percent, 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 gas 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 gas prices rise and fall in the future,” he said.
Attractive price points, sustained value of off-lease units, and rising interest rates point toward leasing remaining a viable financing option for dealers and customers this year.