Falling Gas Prices Reduce Used Car Values for Hybrids

If you bought a hybrid with an eye on reselling it for big bucks after a short period of use time, beware! The value of used vehicles in this class is dropping. To blame are cheaper fuel costs. Where is the trend heading? Was GM CEO Dan Akerson right after all?

Kelley Blue Book on Vehicle Values

The KBB has issued a press release that is worrisome to the owners of fuel efficient cars. Even though, over the last five months the used car values of hybrids have spiked by almost 25 percent, the numbers are dropping. The decline in used car values is affecting hybrids, compacts and also subcompacts, which owners have thus far considered great resale opportunities.

Dollars and Cents

When gas reached a high point of $3.98 in May, new riders clogged public transportation and made beelines for the used car lots in search of hybrids. As is the case with rising and falling oil and gas prices, market corrections eventually led to a drop in gasoline costs at the pump; the average price currently sits at $3.71.

It is an interesting side effect to note that the value of used vehicles in the fuel-efficient category is falling in harmony with the dropping gas prices. Thus, while the value of a used hybrid car increased by 0.85 percent in the third week of May, it only went up by 0.74 percent in the month's fourth week. At the beginning of June, the value rose by 0.58 percent, but on June 10 it fell by 0.30 percent. This trend is expected to continue.

General Motors CEO Dan Akerson Proposes Artificial Market Share Creation

"Government Motors," as Investors refers to GM, did not make many friends when CEO Dan Akerson proposed that "we ought to just slap a 50-cent or a dollar tax on a gallon of gas." He contends that this draconian increase in fuel costs would force a larger segment of the population to finally leave behind the gasoline-powered vehicle in favor of a hybrid, or at least a much more fuel-efficient version of their daily drivers.

Rewarding the purchase of fuel efficient cars -- new or used -- by reducing the pain at the pump -- which was previously artificially increased -- is one way to change consumer behavior. Of course, offering attractive hybrid vehicles that consumers actually want to buy would be another avenue to take. (As would be increased mileage standards.)

Advice for Hybrid Car Owners

There is no reason to hope that GM's poison pill measure finds backing on Capitol Hill. The KBB suggests that owners of fuel-efficient cars wait it out until the end of summer before trying to resell or trade in a used car for maximum value. The experts foresee market stability at the end of summer, which is incidentally also a good time to buy a car with an eye on fuel efficiency.

Sources

PR Newswire: "Fuel-efficient Used-vehicle Values Have Reached Peak, According to Kelley Blue Book"
Investors: "Government Motors Pushes Gas Tax Bailout"