Gasoline prices have jumped again over the past month-and-a-half, which means that used car and truck prices should have expanded and contracted like we’ve seen during previous fuel spikes.   

Only this time around, things haven’t remained true to past form.  In fact, the recent 38 cent spike in the price of regular grade gasoline has done little to change the course that segment prices have been following since April.

More specifically, over the past three months the 3.0% average rate of loss for compact and mid-size cars has led all others segments by a wide margin, while prices for mainstream truck segments have averaged dips of slightly more than half that amount, or just 1.6%.

Translated into dollar terms, the average price of a three year old compact car fell by $1,350 over the period, while large pickup losses totaled only $525.

These depreciation inequalities have continued over the first half of August, as compact and mid-size car prices fell by 2.0% and 1.7% respectively, while prices for utilities of all sizes (compact to large) and large pickups barely slipped at an average of 0.3%.   

It stands to reason that higher gasoline prices are largely responsible for keeping car losses below the higher rate of decline seen over the past few months, but by historical standards the improvement has been slight at best.

Even more notable is the continued strength exhibited by truck segments, where so far higher gas prices have had no discernible impact on demand.



So what’s going on here?  Why haven’t we seen more of a pronounced gas-related reaction in used vehicle prices?
These questions can probably be answered with just one word – familiarity.

Of course few events can be explained by just one causal factor and there are other drivers at play here, but it stands to reason that consumers will become increasingly desensitized to dramatic and rapid changes in fuel prices as these occurrences become more frequent. 
 
The chart below helps illustrates this point by allowing us to compare the movement of used vehicle prices through the last two major swings in gasoline prices.

Looking back to last year, we see how car prices exploded and truck prices softened as gasoline prices grew from $3.07 per gallon in early January, to a peak of $3.96 in May.

Fast forward to this spring and we see that gasoline prices followed a familiar course towards a peak of $3.94 per gallon in April, but that the associated change in used vehicle prices is notably different.

Once again, car prices increased beyond the normal lift associated with the season, but the degree of growth was considerably smaller than what occurred in 2011.  More distinctly, truck prices remained relatively firm, and in the case of mid-size utilities, they actually improved moderately.



So when we pull the curtain back on time a bit farther, the limited reaction that we’re seeing today isn’t so surprising.

Basically, consumers have grown more accustomed to dramatic swings in gasoline prices, and as long as pump prices bounce between charted levels and net annual changes remain moderate, we can expect that consumers will choose to stay the course with their current vehicle – which most likely best fits their specific lifestyle – rather than make unnecessary sacrifices for the sake of improved fuel economy. 

Considering this, we should see used price volatility lessen as gas prices rise and fall in the future.