Tuesday, June 14, 2011

Kelley Blue Book reports that values for fuel-efficient used vehicles have peaked

Kelley Blue Book’s www.kbb.com reports that after increasing close to 25% throughout 20 weeks of consecutive gains, values for fuel-efficient used vehicles have now peaked. For the first time since January, values for subcompact, compact and hybrid cars have started to decline in response to falling gas prices.

In fact, Kelley Blue Book analysts currently see values for some of these vehicles dip into the red for the first time since January. The majority of strength this year has been driven by the rapid rise in gas prices, which peaked in May with a national average of $3.98, and since has declined steadily to $3.71 today.

Weekly valuation change by segment for past four weeks (MY08-10)
SegmentWeekly change
5/20/20115/27/20116/3/20116/10/2011
Industry Average 0.09% 0.24% 0.05% -0.40%
Compact Car 0.67% 1.06% 0.35% -0.30%
Hybrid Car 0.85% 0.74% 0.58% -0.30%
Subcompact Car 0.56% 1.04% 0.38%d -0.10%

On 8 June 2011, the Organization of the Petroleum Exporting Countries (OPEC) announced that crude oil production would be held constant; however, on 10 June 10, 2011, Saudi Arabia broke rank announcing that it would increase crude oil production to 10 million barrels per day (13% more than May levels). This is a strong indication that gas prices will continue to fall through summer, said KBB, bringing demand for fuel-efficient vehicles and their premium prices down with it.

If Saudi Arabia holds true to its planned production increase, Kelley Blue Book analysts expect used-car prices to continue to slip an additional 3 to 5% through summer, and even more if gas prices fall below $3.50 per gallon, nationally.

Regardless of where these used-vehicle values end up, fuel-efficient vehicles will remain a smart purchase for budget-conscious consumers. Our advice to dealers and consumers is to shop with caution today, since values are likely to fall through the early part of summer. If possible, it would be best to hold off on purchasing a fuel-efficient vehicle until after summer, when values should be more stable.

—Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book




Source: Green Car Congress

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