What’s Next for Carpool Hybrids? Market Update…

The past few months have seen a big drop in both supply and demand for carpool hybrids, but we’re starting to see some changes…

On the demand side, the slow economy has dampened purchases of all vehicles, even very practical cars like the Prius and Civic. Slower economic growth also means less traffic and lower gas prices, both key factors that drive the interest in these cars.

On the supply side, cars with HOV stickers in good condition are getting harder to find. The last stickers were issued in February, 2007, which means the newest cars you can find will be at least two years old, with most in the 3-5 year old range. Since these cars tend to be driven a lot (typically 25K+ miles/year), we’re seeing many cars with 80K miles or more, and in less than excellent condition. The large supply of fleet cars and rental returns that we saw last year has dried up. So newer, low mileage cars in top condition have become rare.

The net effect of all this is that while the price of carpool hybrids has come down significantly, they still command a premium over the book value for the same car without carpool stickers.

Looking forward, the next generation of hybrids are hitting the market now, and as they do, they’ll further depress values on older hybrids. But the good news is that economic activity seems to be perking up. Unfortunately, it’s also bringing more traffic and rising gas prices. Expect to see higher prices in the months ahead on a dwindling supply of top quality carpool hybrids, while older higher mileage cars continue to drop in value.

The big unknown is what will happen after January, 2011 when the stickers expire by law. The state of CA could issue a new supply of stickers, or it could grandfather the existing stickers for the life of the cars that have them. But if the state does nothing, cars with the stickers will no longer get a free pass in the carpool lanes. You need to take that risk into account when considering purchase of one of these cars.

Because of the uncertainty in the marketplace, we are only keeping a small inventory of carpool hybrids on hand, typically exceptional cars that offer good value and will have strong demand. We currently have two such cars available (Click here for full details.) We are also brokering cars for those with an interest. What that means is that you tell us your preferences and we’ll do our best to find the car for you in the wholesale marketplace (dealer auctions, fleet cars sales, etc.).

As always, please call Gene Chamson at (510) 864-1792 if you have any questions, or would like to discuss your particular needs.