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AUTOMOTIVE INDUSTRY NEWS
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Kelley Blue Books reports falling values for fuel-efficient cars

Irvine-based company predicts 15 percent correction by the end of the year.

By Schardé VallonePublished: July 12, 2011 12:49 PM

Kelley Blue Book, the Irvine-based provider of new and used car information, has reported that the value of fuel-efficient vehicles will likely fall 15 percent by the end of the year. After 20 consecutive weeks of value increases - the value of “gas-sipping” vehicles finally peaked in May. Kelley Blue Book has determined this decline is a result of stabilizing gas prices in addition to Japanese manufacturers regaining normal production levels quicker than originally expected.

“While depreciation has been relatively mild so far, based on changes in gas prices and issues with supply, Kelley Blue Book believes a significant 15 percent correction is likely by the end of the year,” says the company’s manager of vehicle valuation, Alec Gutierrez. “If we take a look back at the auction market in 2008 when gas prices hit four dollars per gallon, we can foresee drops during the next few months.”

In both the first half of this year and of 2008, the escalation in gas price caused a 21 percent increase in the value of gas-saving vehicles. At the end of 2008, however, the value decreased about 40 percent due to the economic uncertainty and dramatic decrease in gas prices at the end of the year.

Despite this trend, it has been determined that there will not be a repeat of such a severe decreases in 2011. Kelley Blue Book attributes this to the fact that the economic uncertainty of 2008 was much greater than it is this year. The main determinants affecting the ultimate drop in value of fuel-efficient vehicles, Kelley Blue Book states, will be fuel prices and when they will finally stabilize.

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