Hybrids will depreciate faster than gas vehicles, says NADA

Hybrids will depreciate faster than gas vehicles, says NADA

A new report from NADA suggests that plug-in hybrid electric (PHEV) vehicles and plug-in electrics (PEV) will depreciate faster than both traditional hybrids and traditional gasoline-powered vehicles.

NADA gives several reasons for its forecast: First, the report says, –consumers have adjusted both expectations and household budgets to todayês higher level of fuel prices, to the detriment of hybrid demand.” The volatility in gas prices over the past few years has desensitized consumers to their impact.

Second, –improvements in internal combustion engine fuel economy mean that it takes longer for hybrid savings at the pump to offset their higher upfront costs.” For example, assuming current gas prices and 15,000 miles driven annually, it would take nearly five years to offset the higher purchase price of a 2014 Toyota Camry XLE hybrid versus the same gas-powered model.

Third, gas prices are expected to drop in the next several years because of increased domestic oil production. That prediction is from the U.S. Energy Information Administration.

The report from the NADA Used Car Guide is the June 2014 NADA Market Review: Hybrid Electric Vehicles.