NADAguides: What's in Store for 2006?

NADAguides.com Car Guy Sounds Off With His Predictions for the Coming Year

COSTA MESA, Calif., Feb. 1 -- Mark Perleberg, NADAguides.com's leading auto prognosticator, today published his predictions for 2006 for new and used cars, trucks and SUVs. Here's what he had to say.

2006 New Car Forecast

* For the first time in many years, gas prices will be one of the most important deciding factors for shoppers when it comes to buying a new car, truck or SUV.

* The longer gas prices remain high, the more consumers turn to alternative fuel vehicles. Expect hybrid vehicles to remain popular -- and sales of hybrid vehicles to remain strong -- in the coming year.

* Sales volumes for new vehicles should look similar to 2005, with just a little under 17,000,000 new cars sold in 2006.

* Look for Ford and Chevrolet to continue their battle for the number one, U.S. car-selling-manufacturer spot by offering a variety of new car incentives, rebates and innovative marketing programs -- all designed to sell more vehicles. Toyota will be hot on their heels.

* New car incentives and rebates will still have a large influence on car buyers this year as manufacturers fight for their piece of the pie.

"New car buyers have one of the largest selections of new cars and new car options to choose from this year as manufacturers continue to battle for their share of market," said Perleberg. "And we should see steady sales in the Gulf States area, as local residents continue to replace the vehicles that were destroyed by Hurricane Katrina."

2006 Used Car Forecast

* In the market for a clean, low-mileage used car? Perleberg says these types of vehicles will be in demand this year, which means prices of these types of vehicles will remain relatively high.

* Great news for buyers interested in an older used car bargain! Perleberg expects an overabundance of high-mileage used cars in need of reconditioning and sales of these types of vehicles will remain weak (which will ultimately drive down prices).

* Perleberg expects consumers in the Gulf States area to continue to look for and purchase used cars to replace the vehicles that were damaged in the aftermath of Hurricane Katrina last year.

"And I expect the demand for clean, late model trade-ins to grow this year but the supply just won't be there," said Perleberg. "What does this mean for late model used car values? Prices should remain relatively constant, if not slightly higher," said Perleberg.

The reason? In recent years, Perleberg says many car buyers financed their new car purchases. But as new car prices continue to drop as manufacturer incentives and rebates programs continue to expand, consumers end up owing more on their vehicles than they're actually worth. This 'upside down' scenario forces consumers to hold onto their clean, late model used cars to avoid taking a loss at resale time. As such, supplies of these types of cars goes down, while prices rise.