Four-dollar gasoline hasn’t just kept new trucks and SUVs on dealership lots. It’s also made it more difficult to unload used gas-guzzlers. Meanwhile, hybrids are quickly becoming the hottest vehicles in the used market.
“Gas prices and the impacts on the resale value are the number one issues we’re dealing with,” said James Clark, editorial director at Automotive Leasing Guide, in an interview with HybridCars.com. ALG monitors and forecasts trends in the residual values of cars and trucks. Hybrid cars were first introduced in the United States in late 1999—so the used hybrid market is still in its infancy, making it difficult to forecast long-term resale values for gas-electric vehicles.
Yet, the recent trends are revealing. “In the last month or two, we’ve seen values go up, ballpark, from around $15,000 for a 2005 model year Prius to around $17,000. That’s pretty significant for a used car price to increase that much in a short time.”
For Americans who are trying to get rid of their Tahoes and Explorers for the sake of better fuel economy, pricey gas means not only fewer buyers, but a glut of competition from other like-minded resellers. Unless you have limitless amounts of money to spend on gasoline, buying an SUV recently has proven to be a losing gamble on oil prices staying low. Depending on the make and model, it’s not uncommon for light trucks and SUVs to have lost more than $3,000 in resale value from what a similar vehicle with the same mileage would have been worth just last year. According to the Wall Street Journal, 36 percent of people who traded in their SUVs in May still owed more on the vehicle than it was worth.
Whether this price depreciation lasts depends on where gas prices go in the near future. Industry executives and analysts are not planning for the gas to drop back to 2002 levels, and don’t expect SUVs to regain their popularity – unless they are efficient hybrid SUVs.
“At both sides of the margins, vehicles with really good gas mileage or really poor gas mileage are both very difficult to forecast right now,” said Clark. “But if you’re doing your cost of ownership calculation—which more people are doing right now—the impacts are significant.”