MCLEAN - The NADA Used Car Guide predicted yesterday that gas prices will peak at $4 per gallon in May, but said it expects the impact on used-car prices to be mild by historical standards.
According to the U.S. Energy Information Administration, the average price of regular grade gasoline has jumped by 49 cents since the beginning of the year, which is 40 cents higher than the seasonal rise typically seen over this period. Jonathan Banks, NADA Used Car Guide executive automotive analyst, said gasoline prices are being affected by expectations that the oil supply in Iran will be disrupted rather than from any real loss in the amount of oil being produced, Banks said.
"Considering consumers have become accustomed to gasoline prices that averaged more than $3.50 last year, this time around we don't expect to see dramatic shifts in the shopping behavior of consumers for more fuel-efficient vehicles when prices approach the $4 mark," he added.
"Looking at opposite ends of the fuel-economy spectrum, prices for used compact cars, like the Ford Focus or Honda Civic, at $4 per gallon will increase by an average of $179," Banks said. "Used prices for large SUVs, such as the Chevy Tahoe, will decline by $387, while price adjustments for other vehicle segments will land somewhere in between."
Gasoline prices would have to move further into unknown territory for used-vehicle prices to change more dramatically, Banks added. At $4.50 per gallon, compact car prices would increase by $638, or 3.5 times the rate of growth, at $4, while prices for large SUVs would fall by $2,148, or 5.5 times the loss, at NADA's forecasted gasoline price peak.
Although current signs point to gasoline prices remaining below the high of $4.11 recorded in July 2008, there is still a heightened threat that some form of military action could be taken against Iran, Banks said. "If military action is taken against Iran, then all bets on how high gasoline prices will go are off."
Impact of the Rising Cost of Gas on Used Vehicle Prices
Expected change in used vehicle price under certain gas price scenarios.
