Patricia Small
Patricia Small
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While it's tempting to view the sports car segment increase in price as contradictory compared to its loss in retained value, it is important to understand that the retained value metric is only considering 3-year-old vehicles, while the used vehicle price metric includes all model years sold as used. As such, 1- and 2-year-old vehicles are going to significantly increase the average price.
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The full-size car segment is fairly staid, with no new model introductions, according to J.D. Power segmentation. Although retained value improved year-over-year in December, the segment still lags all others. One driver of the increase in retained value is that incentives were higher in December 2005 than December 2004. Higher gas prices may also make these vehicles more appealing to consumers needing more space but also looking for fuel economy.
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Some of the models driving the increase in vehicle price for sporty cars are the Pontiac Solstice, the Audi A3 and the Ford Mustang. It is also likely that demographics are playing a role here. A sporty car is generally not the primary car owned by a household. The 'Baby Boom' generation is at the peak of the earning cycle and makes up a significant portion of the population. An increase in demand from this significant portion of the population would have a positive impact on vehicle prices.
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