Rising gasoline prices are expected to peak at about $4 per gallon in May and will produce a "mild" effect on used-vehicle prices, analysts at NADA Used Car Guides say in a report released Tuesday.
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, says Larry Dixon, an analyst at the company.
Dixon says 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 adds.
Dixon said the company's economic-modeling scenarios do not factor in possible military action with Iran.
Scenarios: $4, $4.50 or $5 gas
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 different scenarios — gasoline at $4, $4.50 and $5 per gallon — and then predicted the effect on the prices of one- to five-year-old used vehicles.
For example, with gasoline prices at $4 per gallon, the prices of used fuel-efficient compact cars such as the Toyota Corolla, Ford Focus and Honda Civic, would increase an average 1.7 percent or $179.
An average gasoline price of $4.50 per gallon would lift the average price of those cars 6 percent or $638, while $5 gasoline would lift their prices 10.4 percent or $1,102.
At the other end of the fuel-efficiency spectrum, $4 per gallon gasoline would deflate prices of large SUVs such as Ford Expedition, Chevrolet Tahoe and Toyota Sequoia 1.6 percent or $387.
Gasoline at $4.50 per gallon would cause prices of large SUVs to drop 8.9 percent or $2,148. If gasoline rises to $5 per gallon, those vehicles' prices would plunge 22 percent or $5,298.