Domestics Rise as Hybrids Continue to Tumble

In February 2009, Kelley Blue Book witnessed continued value appreciation in most of the Truck and SUV segments. It should be noted that full-size pickup trucks and SUVs improved by more than 17 percent and 9 percent, respectively. The upsurge within both the pickup truck and SUV segments was led by the Detroit 3 with increases between 7 and 18 percent. Specifically, regular cab and extra cab trims were the strongest performers as seen in the Silverado 1500 and Ram 1500.

Within the car segment, mid-size and compact vehicles experienced only slight valuation gains of less than 1 percent. Domestics continued to outpace imports with full-size sedans leading the charge, specifically full-size domestic sedans which increased 2.9 percent month-over-month. Luxury and subcompacts showed signs of stability, depreciating only 1.4 percent and 1.7 percent, respectively. This type of depreciation is typical in a normal or stable market, but is surprising given the current unstable economy.

Hybrid vehicles continued to underperform compared to the overall market, showing the greatest month-over-month depreciation at 2.5 percent. Demand for fuel efficient vehicles has dropped significantly as more and more consumers base their purchase decision on vehicle transaction price as opposed to fuel economy. This led to a depreciation of approximately 25 to 30 percent on used hybrid values from their peak during the summer of 2008. Year-to-date 2009, hybrid values have already fallen nearly 5 percent.

Regardless of pressure on fuel prices and a diminished supply of vehicles via reductions in trade-in units and fleet sales, we don’t anticipate that consumer demand will continue to provide sufficient support to further drive the appreciation seen over the past several months. If consumer demand in the used market does not increase in the near term, Kelley Blue Book predicts that this market will return to a typical value depreciation pattern once again.

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