NADA: $5 fuel would torpedo used-SUV prices
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Rising gasoline prices are expected to peak at about $4 a gallon in May and produce a "mild" effect on most used-vehicle prices, analysts at NADA Used Car Guides say.
But if tensions over Iran's nuclear program escalate into military action, "then it would be difficult to make a prediction" about how high gasoline prices would go and the effect on used-vehicle prices, said Larry Dixon, an analyst at the company.
Even $5 a gallon gasoline would slash the prices of used large SUVs by more than a fifth, NADA Used Car Guides' study shows.
Dixon said escalating gasoline prices are being pushed by the threat of a military conflict that would disrupt oil supplies rather than a loss of oil production.
"We are always making vehicle price adjustments based, in part, on our expectations for the price of gasoline," he said.
Dixon said the company's economic-modeling scenarios do not factor in possible military action with Iran.
Though the company, based on its internal studies, does not expect gasoline prices to exceed the all-time high national average price of $4.11 set in July 2008, it has developed three scenarios -- gasoline at $4, $4.50 and $5 a gallon -- and then predicted the effect on the prices of 1- to 5-year-old used vehicles.
For example, with gasoline prices at $4 a gallon, the prices of used fuel-efficient compact cars such as the Toyota Corolla, Ford Focus and Honda Civic would increase an average 2 percent or $179.
An average gasoline price of $4.50 a gallon would lift the average price of those cars 6 percent or $638, while $5 gasoline would lift their prices 10 percent or $1,102.
At the other end of the fuel-efficiency spectrum, $4 a gallon gasoline would deflate the prices of large SUVs such as the Ford Expedition, Chevrolet Tahoe and Toyota Sequoia 2 percent or $387.
Gasoline at $4.50 a gallon would cause the prices of large SUVs to drop 9 percent or $2,148. If gasoline rises to $5 a gallon, those vehicles' prices would plunge 22 percent or $5,298.
| $5 gasoline: Winners and losers | |||
| Forecast changes in average used-vehicle prices if fuel prices keep rising | |||
| Segment | $4/gallon | $4.50 | $5 |
| Compact | 2% | 6% | 10% |
| Mid-sized | 1% | 2% | 2% |
| Large pickup | –2% | –9% | –21% |
| Large SUV | –2% | –9% | –22% |
| Source: NADA Used Car Guide | |||
You can reach Arlena Sawyers at asawyers@crain.com.
