The impact of gas prices and the demand for more fuel-efficient vehicles is hitting the wholesale market, with vehicles averaging less than 34 miles per gallon dropping in price.
Driving the news: In the Q3 Manheim Used Vehicle Index Report, Jonathan Gregory, Senior Director of Economic and Industry Insights, shared a breakdown of wholesale vehicle pricing by miles per gallon.
The most fuel-efficient vehicles, which average more than 40 miles per gallon and are almost exclusively hybrids, have seen a 9.9% increase in price since January.
Vehicles in the 35 to 39 mpg range saw a 3.7% price jump.
Every vehicle below 30 mpg dropped in price, with a 25% spread in nine months between the most fuel-efficient and the least, Gregory noted.
Impact of fuel prices: Gas prices began rising as conflict in the Middle East began and hit a national average above $4.50 per gallon in May, according to AAA, before falling toward the end of the summer.
Gas prices began rising again and hit a September record of $4.48 and remain elevated entering October.
Diesel prices, meanwhile, hit an all-time high in September of $6.52.
Trucks and large vehicles most impacted: High fuel prices have weakened demand for some large trucks and diesels on the retail side.
In turn, vehicles averaging under 15 miles per gallon have dropped 15% in the past 10 months.
Vehicles in the 15 to 19 mpg range are down 8.8%.
“It’s something we kicked around in Q2 and could see with trucks and large SUVs, but in Q3 it’s been so much worse,” Gregory told CDG News. “We could see large trucks and SUVs were doing worse, and it’s really throwing off the top-line numbers because they are the most expensive vehicles.”
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Impact on diesels: Diesels represent only about 3% of the vehicles at Manheim.
But the supply rose to 39 days in September, which was 11 days above the overall market.
The days of supply are up 27% since last year.
Bottom line: In acquiring used inventory, Gregory points out that the miles-per-gallon consideration is a way for dealers to meet consumers where they are and help with another pressure point. Dealers may consider adding more compact vehicles and fuel-efficient vehicles.
“Consumers are trading down, from new to used and full size to compact,” Gregory said. “They are also considering MPGs.”
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