Used car prices soaring with gas prices

High gas prices are starting to impact other prices, from the cost of food to used cars.

Increased demand this year for fuel sipping economy cars, coupled with the shortage of new Japanese cars after the earthquake, is leading to a new type of sticker shock at used car lots.

Everyone Wants Good Gas Mileage

John Morse needs a car for his teenage son, and like a lot of drivers, there's only one type of car he's considering right now.

Morse said "just the way gas prices are going up, I'm going to try to find something a little more economical."

Unfortunately, as gas prices soar this spring, so is the price of economical small cars.

Car dealer Gary Heflin can't keep Corollas, Kias, Ford Focuses, and Hyundais in stock.

Blue Book Prices Soar

But as a result of surging demand, Heflin says wholesale prices on small cars are up sharply, to the point where last month's blue book values are meaningless.

He said "NADA came out and said not to use the book dealers were using, because prices have escalated so much in the past week to 10 days, that they need to go by a different guide."

Example? Heflin tells me a used 2008 Hyundai Excel on his showroom floor has jumped in blue book value since he got it a few weeks ago. He said "if we checked today, the value is probably $12,700, not the $11,700 the sticker shows."

The car buying website cars.com says the average price of a used Hyundai -- same car, same mileage -- is up 22% over a year ago.

Small Fords, like the Focus, are up 14%. Honda Civics are up even more in value.

If you are interested in a brand new small car, you will find plenty available at local dealers. Just don't expect much in the way of incentives: Those big cash back deals are now limited to big gas guzzling vehicles.

SUV Trade-in Caution

Meantime, are you thinking of trading a gas guzzling land yacht in your driveway for a small fuel efficient car to save money? It may not worth it right now.

Helflin said "if someone's trading in that larger stuff, theyre gonna take a pretty good financial hit. And sometimes you have to weigh whether you should trade it."

The problem is that trade-in prices on large, frame based SUV's are falling.  The car buying website Edmunds.com says assume you own an suv worth $20,000 dollars. You trade it in for $18,000.

But new small cars average $22,000. So Edmunds says the cost of trading down will be 4 grand. It could take several years of fillups to make up that $4,000, which is why that SUV may not look too bad once you run the numbers.

If, on the other hand, you lease your SUV, then Edmunds says trading down for an economy car may make perfect sense.

As always dont waste your money.

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