Black Book Carefully Watching Gasoline-to-Small-Used-Car Price Ratio

gasoline in small car

by Jon LeSage, remarketing editor, Automotive Digest

Ricky Beggs wants to know: Are lower gasoline prices causing smaller used cars to see a big price drop? It could very well be….. but it will take a few watchful eyes to gauge the real impact.

During the summer and into the early fall, Ricky Beggs, Editorial Director at Black Book, was noticing that the typical gas-price-to-small-car used vehicle value ratio was off kilter. Gasoline prices were creeping back up, but wholesale prices were stronger than usual for smaller cars.

Now it’s looking to fall in line with more typical remarketing patterns. Black Book just reported that Entry-Level Cars have depreciated -16.6% over the past year, and Entry Mid-Size Cars have dropped -16.9% during that same time.

These have been the largest change levels of all car and truck segments. Typical Entry-Level Cars are the Honda Fit, Hyundai Accent, and Chevrolet Aveo. Examples of Entry Mid-Size Cars include Volkswagen Jetta, Chevrolet Malibu, and Chrysler Sebring.

As for gas prices over the past year, they’ve dropped from a high of $3.78 on February 25 to a current level of about $3.29.

To give you a look at the overall market during this time frame, the average depreciated since a year ago is -11.8%. Full-Size Pickup Trucks have seen the best performance with deprecation at -4.4%.

Black Book will be following the trend to see if there’s a direct reflection on gas and used car prices. Is it more of a supply and demand issue, and what will it look like in 2014?

“The depreciation levels for Entry-Level Cars and Entry Mid-Size Cars are average in comparison against pre-recession-level price changes, but it’s still something to keep a watchful eye on when you compare with the rest of today’s segment activity,” Beggs said.

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