Used Car Prices Falling, Along With Hybrid Sales

The rise of gasoline prices and the earthquake and tsunami in Japan placed a premium on used, fuel-efficient cars, making them a lot more expensive to buy.

But with Japan's slow recovery and the recent decline in gas prices, that premium appears to be evaporating, according to a report by Kelly Blue Book (KBB), which tracks vehicle values.

Prices for used subcompacts, which tend to get good gas mileage, are up an average 22 percent since the beginning of the year. But now KBB has noted a softening in prices. The company predicts prices will continue to fall, and will be back to normal levels by the end of the summer, depending on the price of gasoline.

If fuel-efficient subcompacts are getting cheaper, what about hybrids and electrics, which tend to be pricey to start with? Automotive website Edmunds.com says they may not be getting cheaper, but fewer consumers are buying them now that gas prices are on the way down.

Hybrids and electric sales plunge

Edmunds says sales of hybrid and plug-in electric vehicles fell to a 16-month low in May, dragged down by increased competition from lower-priced gas-powered small cars. May sales of hybrid and electric-drive vehicles were off 35.8 percent from a year earlier, led by dramatic declines in sales of Toyota and Honda models.

Overall, Toyota and Lexus hybrids dropped 45.1 percent for the month. Honda, the second-largest producer of hybrids, saw its sales in the segment fall 29 percent in May.

"For those selling hybrids, it is incredibly bad luck that the Japanese earthquake and associated production disruptions occurred as gas prices were reaching their highest levels in three years," said Edmunds.com Chief Economist Lacey Plache. "While Japanese automakers may well gain back their lost share on other vehicles, hybrids will face an even steeper climb back to previous levels, given the greater and growing competition from fuel-efficient, non-hybrid vehicles."

Taking the biggest hit were sales of the Toyota Prius, which traditionally account for about half of the hybrid market. A total of 6,924 Priuses were sold in May, down 51 percent from the same month last year.

Low supply and higher prices have made the popular hybrid less palatable to consumers. A pricing analysis by Edmunds.com found that the effective cost of a new Prius was $2,500 more in May than just three months ago.