Experts advise consumers to do the math when considering fuel-efficient cars

(February 24, 2012) IRVINE, Calif. — Kelley Blue Book www.kbb.com today advises car shoppers to weigh their options carefully before making vehicle purchase decisions, in light of rising fuel prices. Fuel prices are up to $3.59 per gallon nationally and there are growing concerns that they will surpass $4 per gallon sometime this year. Fuel and oil prices have surged amidst rising tensions in Iran and if a resolution is not reached quickly, the United States could see fuel prices approach 2008's record high of $4.11 per gallon, based on speculation alone. 

In addition, if the Persian Gulf oil supply is disrupted for any reason, the United States could see fuel prices well beyond $4 per gallon, to levels that could potentially send the country back into a recession.

While gas prices may surpass $4 per gallon in the short term, Kelley Blue Book experts advise consumers to determine the overall savings of swapping out their current ride for something more fuel efficient, versus the incremental increase in money spent on fuel.

"Assuming the average consumer drives 12,000 miles per year in a vehicle that gets 20 mpg, an increase of $1 per gallon, from $3.60 to $4.60 per gallon as an example, would only result in an approximate increase of $11.50 per week in fuel expenses," said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book. 

"While in today's economic environment many families are on an extremely tight budget and $11.50 per week may be enough to break the bank, for others, it would amount to a small lifestyle change, such as bringing a sandwich to work rather than going out to lunch, or perhaps cutting back on Starbucks."

In today's market, there are plenty of options available in a variety of segments for consumers seeking to reduce their pain at the pump. Those considering a mid-size sedan can look to the all-new Toyota Camry Hybrid, which offers 41 mpg on the highway, or the all-new 38-mpg Chevrolet Malibu Eco. The Ford Fiesta and Hyundai Accent are excellent choices for budget-conscious consumers who do not need a lot of space.  Each of these subcompacts is available for around $15,000 and offer 40 mpg on the highway.

If consumers are planning to purchase one of these vehicles in the next few months, they should not expect dealers to offer significant discounts.  In both 2008 and 2011, Kelley Blue Book saw monthly market share for compact cars increase by more than 3 percentage points when fuel prices peaked, and as more consumers flock to compacts, prices will remain firm.

Used-car shoppers can expect to see even more significant price increases in the months ahead if gas prices continue on their current upward trajectory. 

Given the limited supply, used cars tend to be more volatile when fuel prices increase aggressively, especially values of fuel-efficient compacts and hybrids.  In both 2008 and 2011, values of used fuel-efficient vehicles increased by more than 20 percent, only to retreat once fuel prices cooled down.  If fuel prices surpass $4 per gallon again, Kelley Blue Book would expect to see similar gains this year.  Therefore, consumers seeking a used compact to combat rising fuel prices are advised to act quickly.  Values have been relatively stable so far this year but as fuel prices continue to climb, it is only a matter of time before values begin to pick up steam.