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ALG: Mid-compacts and Premium Fullsize SUVs to be Impacted Most by Projected 2013 Gas Prices

June 3, 2010
2 min to read


SANTA BARBARA, Calif. - ALG, a subsidiary of DealerTrack Holdings, Inc. and the industry benchmark for residual values and depreciation data, announced the availability of a new research report that quantifies the major supply and demand factors contributing to its 36-month residual value forecasts for two vehicle segments: Mid-Compacts and Premium Fullsize SUVs.


"Gasoline prices are a key driver of resale values at the segment level, and this new white paper focuses on the two segments - Mid-Compacts and Premium Fullsize SUVs - that are most significantly impacted, positively and negatively," said Matt Traylen, ALG's chief economist. "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."

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Demand in the Mid-Compact segment, which includes hybrids, spiked in 2008 when gas prices hit record highs. Although it dipped briefly when gas prices receded, demand for Mid-Compacts has remained above the industry average, benefiting most recently from a number of new product introductions and a resurgence in gas prices.


ALG's outlook for this segment is positive, based in part on its forecast that U.S. gas prices will average $4.13 per gallon in 2013, which is expected to positively impact used auction values by 13 percent relative to the overall industry, contributing 9.3 percentage points to ALG's current 36-month residual value forecast. Incorporating other factors, ALG expects the segment's used auction values to improve 29% overall over the next three years.


In the Premium Fullsize SUV segment, demand has been declining for more than two years as gas price volatility and the recessionary environment have more than offset the positive impact of new product launches.


ALG's 2013 gas price forecast negatively impacts expected used auction values for Premium Fullsize SUVs by 20 percent relative to the industry, which reduces the 36-month residual value forecast for the segment by 7.4 percentage points. Overall, however, the segment's used auction values are expected to be essentially unchanged over the next three years, with significant declines in used vehicle supply and increasing wages and housing prices offsetting the negative impact from gas prices.

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