KBB: OEM Incentives Affecting Used-vehicle Market as Overall Values Climb

IRVINE, Calif. — Analysts from Kelley Blue Book believe the effects from generous incentives handed out by several automakers in recent weeks are spilling into the used-vehicle market, AutoRemarketing reported. An example from the May edition of the Blue Market Report showed how shoppers enticed by new-vehicles incentives are mulling another option. More buyers are considering that for the price of a new non-luxury vehicle, they can purchase a used entry-level luxury unit, creating an increase in demand for used luxury vehicles. "The plethora of choices is increasing competition among segments as the economy still plays a role in consumers' purchase decisions," noted Juan Flores, director of vehicle valuation at Kelley Blue Book. "Popular segments such as full-size SUVs and hybrids are taking a back seat to more practical, cost-effective people movers," Flores continued. "Car shoppers are opting for ‘value,' especially with the availability of cheaper vehicles across all segments." KBB indicated that overall values are up 1.7 percent this month, with minivans and compact cars outperforming the market. Analysts emphasized that compact cars are flourishing compared to their mid-size and full-size counterparts. They found that compact cars have jumped 2.6 percent. Looking at a year-over-year comparison, the segment gain is 1.7 percent. KBB attributed the reasons for rises in part due to the soft economy since these units are affordable and offer enhanced fuel economy. Kelley Blue Book mentioned two specific units that have climbed the most. They are Saturn's Ion and the Mitsubishi Lancer with 11.3-percent and 7.2-percent jumps, respectively. "These historically low performers also benefit from the economy as consumers take advantage of the few remaining deals available in the market," Flores told AutoRemarketing. Going in the opposite direction in a segment with strong overall gains were the Suzuki SX4 and the Hyundai Elantra. Analysts spotted a 0.9-percent drop for the SX4 and a 0.1-percent dip for the Elantra. Moving on to midsize cars, Kelley Blue Book mentioned the entire segment jumped 1.9 percent for the month and 3.6 percent from this time last year. Two vehicles that highlighted the gains were a pair of domestic offerings, the Dodge Stratus and Lincoln MKZ. The report noted a 10-percent rise for the Stratus and a solid 7.2-percent increase for the MKZ. Sliding in the opposite way according to analysts were two vehicles that often perform well. They said Toyota's Camry and the Hyundai Sonata slumped 2.5 percent and 2.4 percent, respectively. While gas prices have not jumped enough in the company's opinion to make hybrids a cost-effective option, Kelley Blue Book believes this situation could change as costs at the pump pick up heading into summer. To date, analysts indicated hybrid cars are decreasing 1.2 percent this month and 4.4 percent for the year. Among the group of underperforming hybrids are the Toyota Camry Hybrid (down 6.0 percent), Lexus GS450h (off 3.9 percent) and Toyota Prius (down 3.6 percent). However, KBB noted two units bucking the hybrid trend. Those vehicles were the Chevrolet Malibu Hybrid and Honda Civic Hybrid, "since they are relatively cheaper models among their peers." Analysts found the Malibu Hybrid climbed 3.5 percent and Civic Hybrid edged up by 1.6 percent.