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

Lincoln Navigator

The 2010 Lincoln Navigator has an MSRP of $55,000 and is rated at 14 MPG in the city. Rising gas prices in the coming years will erode the vehicle’s residual value.

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.

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May 2010 Dashboard: Hybrid Car Sales Rebound

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Sales of gas-electric cars jumped nearly 20 percent in May, compared to last month, outpacing the overall vehicle market that increased by 12.3 percent. Sales of the 2010 Toyota Prius, which continues to make up half of all hybrid purchases, increased by 13.5 percent to 14,248 units—despite a relatively poor showing by the entire Toyota brand. Industry observers believe that Toyota has yet to overcome negative publicity from safety recalls earlier this years, yet car shoppers are apparently excusing the Toyota Prius from those quality concerns.

Prius in Vineyard

2010 Toyota Prius.

Sales of the Ford Fusion Hybrid accelerated by a whopping 64 percent to 2,486 units. Ford also added nearly 25 percent more sales of the Ford Escape Hybrid. At this point, Ford has decisively leapfrogged Honda to become the number two seller of hybrid cars. Toyota owns 68 percent of the hybrid market; Ford holds 14 percent; and Honda has dropped to nearly 9 percent of hybrid car sales. The upcoming Honda CR-Z hybrid might help the company regain the second place spot—and Honda executives are promising a clean-slate approach for future hybrids.

Sales of the Altima hybrid, which is only available in eight states, soared by 253 percent. It’s unclear if publicity about the company’s all-electric Nissan Leaf helped raise the green perception of the entire Nissan brand.

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