IRVINE, CA- Kelley Blue Book (KBB) forecasts that values of fuel-efficient vehicles will drop by 15 percent by year’s end in response to stabilizing gas prices and Japanese automakers returning production to normal levels.

KBB stated that after 20 weeks of consecutive increases in values for fuel-efficient vehicles, values peaked in May as fuel prices fell. From January through May of 2011, fuel-efficient vehicle values increased 20 to 25 percent. However, the organization said that during the last 4 to 6 weeks, values of compacts and subcompacts declined approximately 1 to 2 percent, along with the overall market. That said, KBB’s valuation team said it doesn’t expect the overall used-vehicle market to decline any more than an additional 3 to 5 percent.

"While depreciation has been relatively mild so far, based on changes in gas prices and issues with supply, Kelley Blue Book believes a significant 15 percent correction is likely by the end of the year," said Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book.  "If we take a look back at the auction market in 2008 when gas prices hit $4.00 per gallon, we can foresee drops during the next few months."

The key differences in the market between today and 2008 noted by KBB are less economic uncertainty, higher fuel prices compared to that period (even though prices fell), and a much lower supply of used vehicles than in 2008.

Originally posted on Business Fleet