It doesn’t take a genius to figure out that gas prices have a huge impact on the car market.  When gas prices jump up, it sends consumers into a frenzy to trade in their gas guzzler for a more fuel efficient ride.  This causes a flood of 8 and even 6 cylinder vehicles on the secondary market, and a high demand for smaller, 4 cylinder vehicles.  On the new car market, dealers are having more trouble selling the big vehicles, so the manufacturers are offering significant incentives to move them.  This further reduces the value of similar vehicles on the secondary market. 

Those of us that took economics classes in school remember that when supply exceeds demand, as with the big gas guzzlers, prices plummet.  On the other hand, when demand increases (think little Honda), prices also increase. The recent gas hikes, combined with the overall state of the economy, have certainly caused a shift in the supply and demand for various vehicles.   Not surprisingly, the prices of large SUVs have dropped.  Pickups have also dropped in price, but there is still a demand for work trucks.  On the flip side, the price of 4 cylinder cars, like Hondas and Toyotas, has increased.  I went to auction last week to buy a Honda Element for a client.  I looked at the auction report and saw that they were selling for around $15,500 (auction price).  A vehicle with the exact same year, mileage and options sold for $17,300 just two weeks later!  Even the dealers are shaking their heads.  You can pretty much throw “book value” out the window. 

So, what does this mean for the average consumer?  Determining an accurate value for your trade is a little more challenging than usual right now.  So is determining a fair price to pay for a used car.  It also makes it harder to find a dealer who is willing to give you decent money for your gas guzzling trade.  Therefore, it is even more important to work with a consultant, like Women’s Automotive Solutions, to make sure you get the best price for both your trade and your new (or used) car.  We understand the current market conditions, and we know who is buying and selling what types of vehicles.  You can trust us to get you the best overall deal.  Just give us a call