Prices of Used Compact cars to Drop as Gas Prices Decline
|   Thursday, June 07, 2012
The price of used compact cars have hit speed breakers and the trend is likely to last till the end of next month as gas prices are falling. The trend of prices for used cars will reverse from its rising course by next month as a reason of falling petrol prices in combination with the expected slow down on seasonal basis in the consumer demand for used cars.

From January through to this month, the prices on popular used cars had gone up but now the rates of used compact cars and mid-size cars are likely to fall by about five per cent next month.
The National Automobile Dealers Association reported that the prices for used cars are going to fall with the lowering of petrol prices. The used car prices hit high resale pitch earlier this year.

The popular used cars as far as resale is concerned are Toyota Camry, Honda Civic, Hyundai Elantra and Chevrolet Cobalt. For example, after going up by a thousand and two hundred dollars from January through April this year, the prices of Honda Civic sedans are likely to drop by about six hundred dollars on the pre-owned category in the next two months.
Petrol prices are now averaging at $3.74 per gallon and they have come down by about four per cent from the beginning of this year. A swift depreciation in the prices of hybrid cars is very much possible after rising petrol prices reach a summit and then start to fall swiftly.

During such periods of fast changing petrol prices, the value of hybrid cars becomes more dynamic as a result of the consumer demand for the hybrid cars which also goes up and falls down in tandem with the price of petrol. The NADA is looking ahead as far as July end and its Guide for Used Cars is estimating that there will be depreciation for mid-size and small size cars as their values will begin to drop rapidly. These same cars saw a rapid appreciation in the first quarter of this year.

The auto industry experts are also expecting consumers of trucks, SUVs and mini vans to make up a considerable share of total car sales from now on as the low petrol prices will bring the truck purchasers back to the market. The low petrol prices will also make it difficult for the dealers to sell their plug-in electric hybrid cars.

The NADA Used Car Guide has got a reputation as the most accurate provider of car estimates and information on auctions. NADA provides a huge range of car values that include data on used cars, light motor vehicles and commercial vans. NADA exists since 1917 when thirty dealers from the auto trade went to Washington D.C. to justify to the Congress that luxury tax should not be imposed on the purchase of cars. They argued successfully that cars were not a luxury but instead they were necessary in the daily lives of people. The Association was formed then. Today, the Association involves almost sixteen thousand new truck and car dealers with more than thirty thousand franchises on both domestic and foreign fronts.

NADA has estimated that the supply of used cars that are less than five years of age has fallen down by about fifteen per cent in the last three years. Yet, the prices of used cars remained consistently strong over the last year as the scarcity of used popular models had ended in very few off-lease cars coming back to the market, resulting in a small number of trade-ins. People are holding on to their cars for a longer period. The reason why there are very few used cars out there in the market for sale is because people have, in the first place, bought very few new cars in the last three years.
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