Not long ago, the market values of used hybrid electric vehicles, especially the Toyota Prius, were very strong. It made for optimistic trend forecasts on increasing sales of new hybrids and strong retention values – making them all the more appealing to consumer and fleets. More recently, used vehicle values have been softening on hybrids. Other green vehicles are still up in the air, such as plug-in electric vehicles and natural gas vehicles. NADA Used Car Guide has covered these topics in-depth lately.
NADA Used Car Guide’s Perspective edition for June covered the topic of used hybrids. Here are a few highlights of the report along with what’s been happening with natural gas trucks…….
- Hybrid electric vehicles have been seeing decline in US new vehicle sales. Hybrid share of total new vehicle sales went from 3.1% of all new vehicle sales down to 2.9% this year. That’s the first non-production related decline since 2010, according to NADA.
- The Toyota Prius is feeling it harder than the market’s overall 10% drop in hybrid sales this year. Year-to-date, Prius sales are down 19%, while deliveries of the smaller Prius C were only down by 1%.
- Roles reversed between the Prius and the Toyota Corolla. In 2013, the one-year old Prius saw its retention fall to 70%, three points lower than the Corolla’s 73%; as for this year, the Corolla’s retention has been 75%, six points above the Prius’ 69%. The Prius has always been the bellwether symbol of hybrid performance – it’s likely to influence other valuation analyses for other hybrids.
- Gasoline price spikes in 2008, and periods of price increases at lower levels and for shorter periods since that year, boosted sales of new hybrids and strengthened their resale values. But more recently, improvements in fuel efficiency of internal combustion engines (I CEs) and stabilized gasoline prices have softened demand for hybrids. Hybrids usually cost more than fuel efficient gasoline-engine cars, making them less appealing to many car shoppers. As automakers gear up for ambitious fuel economy targets and car shoppers remain interested in better mileage, fuel efficient cars and crossovers are doing well in new vehicle sales and used vehicle value retention.
- With more natural gas trucks showing up in the commercial vehicle market, NADA’s used truck report devoted a section to resale value trending. The report said that natural gas trucks are starting to show up in the secondary, used vehicle market; however, it’s still too early to tell much about their used vehicle performance. There’s yet to be a published benchmark yet for comparing commercial truck resale values to past model years. This has influenced buyers and lenders to be more hesitant about natural gas truck acquisitions, according to the report.
- Owners of hybrids, natural gas trucks, plug-ins, and other alt-fuel vehicles, will need to have a comprehensive lifecycle analysis. For consumers and fleets, the overall reasons for acquiring hybrids or other green vehicles will need to make sense compared to ICEs – even if their resale value is lower (or their residual value for lease holders, which are many times OEMs and their captive finance companies). Fuel efficiency, reduced emissions, environmental gains, and lower maintenance costs for hybrids and EVs may still be sizable enough to offset their used vehicle value retention loss.