ALG Forecasts Residual-Value Impact of $4 Gas by 2013

Automotive Lease Guide, a leading provider of residual value information, sees three things in 2013: $4 a gallon gas, high residual values for hybrids and compacts, and low values for full-size SUVs. “Gasoline prices are a key driver of resale values at the segment level,” explained Matt Traylen, ALG’s chief economist, in a report from Auto Remarketing, a trade publication. “Despite the recent drop in oil and gas prices, we are maintaining our long-term gas price forecast of over $4 per gallon in 2013.”

ALG believes that average U.S. gas prices will be $4.13 in 2013. At those prices, mid-compacts will get a relative bump of 13 percent in value compared with the overall industry. After taking supply and demand into consideration, that means auction values for compacts will improve by 29 percent during the next three years.

ALG analysts continue to look back at 2008 when gas prices spiked, and smaller cars and hybrids saw a corresponding jump in demand. Demand for hybrids dropped with gas prices, but have remained above the industry average, according to ALG.

The bump in three-year residual value was not fully extended to the 2010 Toyota Prius, even though it’s the most fuel-efficient car currently in showrooms—and will therefore help consumers endure high gas prices. The Prius was connected to Toyota recalls earlier this year, eroding some consumer appeal.

ALG projects rising fuel costs will hit hard for owners of premium full-size SUVs, such as the conventional Cadillac Escalade, Mercedes GL Class, and Lincoln Navigator. Analysts predict that auction values for these vehicles will drop by 20 percent relative to the industry.

At the end of May 2010, the U.S. average for a gallon of gas was $2.72, down five cents from the previous week.


  • Frankie

    I don’t believe this malarcy.

  • Jake Radabal

    Why would anyone want to buy an SUV now of days as a daily driver anyhow. I own a 2010 prius that right now i’m getting 56 miles per gallon with it and a dodge ram pickup that gets around 11.5 miles per gallon. I only fill the gas up in the pickup 4 times a year ( 35 gallon tank ). There is no need for me to use it as a daily driver vehicle. Yet some guy at my work has a 95 Dodge Durango that he says gets 11 miles per gallon that he drives every day an does nothing but complain about gas prices and makes fun of my car saying its junk and his Durango will crush it. He says he has to have his Durango because it has four wheel drive. We might see snow a few days a year if that so there is no need for four wheel drive we live. He also isn’t married so he is the only person who is ever in his vehicle when he drives. So I ask, what is the sense of having a SUV for someone like him?

  • Carl

    All the more reason to keep driving my V-8 pickup FOREVER.

    At 3000. miles per year the price of gas has no impact.

    A hybrid will not last long enough to break even.

  • Anonymous

    @carl

    wow, you must be driving some special pickup to last forever. is this the same assumption made about hummer lasting forever comparing to a prius?

    don’t know what math you are doing, if you start your engine at all, price of gas will have an impact. the degree of impact may not be as great as someone driving 30k miles a year, but it will still have an impact.

    a hybrid last long enough to break even? wrong math again buddy. the factor is not only about how long it will last, but more importantly how many miles a vehicle is driven. it’s not for everyone, but to claim this is more of a reason to drive a v8 is a just silly

  • Anonymous

    unfortunately some people still believe they are the center of universe, earth is flat, suv represents bigger body parts, fuel will never run out, few oil spills do not matter, and there is no such thing as climate change.

  • Charles

    I think the math goes something like this:
    Current truck, 3000 miles @ 10 MPG @ $4.00/gallon is $1200/year. Mythical perfect car, 3000 miles @ infinite MPG @ $4.00/gallon is $0.00. If the new car costs $24,000 payback is 20 years. If the $24,000 is invested at only 2%, that could pay for $480 in maintenance per year. In other words keep the old car going as long as possible. It is the smart thing to do from a purely economic point of view.

  • Rich S

    Thinking about payback on the hybrid premium is completely missing the point. Does anyone ever ask about payback on leather seating, premium sound system, or 4 wheel drive? I drive a hybrid cause I want to use less oil! Get it?

  • Mr. Fusion

    I wonder if these were the same arguments back in the day when people were debating those new “horseless carriages”.

  • Anonymous

    Come on put up a picture of the Toyota Land Cruiser. It gets 13/18 MPG, with an MSRP of 65,970! The drop or impact on residual value would be huge considering the Land Cruiser’s pricetag. The people buying these deserve to lose their @$$.

  • Anonymous

    Nice~~~ “horseless carriages” ha ha ha! oooooooooooh ha ha ha!

  • Bill

    The issue boils down to your personal priorities – Do you want to be kind to the planet? Do you want to be economically wise? Do you want to support American manufacturing industry?

    Kindest to the planet would be buying the most efficient, least polluting item regardless of cost.

    Economically wise would look at life-cycle cost.

    Most patriotic would limit your choices to American products.

    A new book, “Our Money, Our Values: Building A Just And Sustainable World” helps the reader look at several perspectives.

    As to SUV’s, my 21 year old Jeep with 349,000+ miles @ 18 mpg average is not kindest to the planet, but 50+mpg would not have saved enough to pay back the cost of replacing it with a hybrid when they became available, and the 4WD has been priceless the few times it was needed. My favorite feature is that the corporate profits from its sale stayed in the US ofA.

  • Collin Burnell

    Actually, for vehicles that are driven less than (say) 5000 miles per year, an Electric or Hybrid vehicle may be a bad choice. Batteries are more likely to fail when they are not used often enough. I haven’t heard of any testing done on the ‘shelf life’ of these batteries left sedentary for long stretches of time.

    As for the article… seems like a no-brainer to me. For those of us who remember the gas crisis of the 70′s, the bigger the vehicle, the more likely it did nothing more than take up space on your front lawn with a FOR SALE sign on it. Nobody was buying them and their value plummeted. We will see those days again.

  • Anonymous

    bill, i don’t buy that argument.

    switching to any new car will almost never make sense from a pure economic perspective (depreciation, interest costs, etc) but that does not prevent people switching from one suv to another. the comparison has to be fair otherwise we all should be walking or riding a bicycle.

  • Maxy

    I wonder if the same arguments as in the days when people would ask the new “horseless carriages.” The fall or impact on the residual value would be enormous, given the Land Cruiser reference price.
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