Dealers see glut of gas-guzzling SUVs

[atlaw4u]

‘Nobody is buying used SUVs,' says one; drivers turning to smaller cars.

AP - April 27, 2008

For used car dealer Ivan Hoyos, accepting a sport utility vehicle as a trade-in is no longer good business.

The only SUV he’s offering at his Florida Auto Sales and Finance is his mother’s red 2004 Mitsubishi Endeavor. With only 21,000 miles on it, he’s advertising the six-cylinder vehicle with the online network Craigslist for $13,991 — about $200 less than Kelley Blue Book’s suggested retail value. Hoyos’ mom purchased a Mazda 5, a smaller crossover vehicle with plenty of interior room but better gas economy — up to 28 miles per gallon as opposed to about 20 for the Mitsubishi.

“Nobody is buying used SUVs,” said Hoyos, 35, who stopped accepting them six months ago. “The truth is more and more dealers are staying away from used SUVs and large trucks ... It doesn’t pay. You can’t have a unit sitting on the lot forever.”

As gas prices pass $3.50 a gallon nationally and the economy teeters on recession, independent used car dealers like Hoyos and massive chains like AutoNation Inc. are having trouble selling used SUVs as buyers prefer smaller, more fuel-efficient vehicles likes hybrids and crossovers (CUVs). Crossovers such as the Ford Edge, Honda CR-V, and Toyota RAV4 have more interior room and more rugged styling that the average car, but with a lighter chassis and generally better gas economy than an SUV.

Trade-in value plummets
Used SUV sales in March were down 14 percent nationally compared to last year, according to data compiled by CNW Marketing Research. That follows drops in used SUV sales of more than 8 percent for the first two months of the year, compared to the same months in 2007.

That trend has sent used SUV prices plummeting, giving owners a shock when they try to trade theirs in and find out how little they can get.

“Owners find out they don’t have the trade equity they thought they had and are forced to keep their vehicles or come up with a large sum of cash to make up the difference,” said Chris Denove, a vice president of the auto information firm J.D. Power and Associates.

David Tivadar has spent three months trying to get fair trade-in value for his 2005 Lexus SUV, which gets about 17 miles per gallon. He would like to trade it in for a minivan that gets better mileage and can accommodate his baby daughter.

He bought the Lexus new for about $33,000, and said the monthly payments of $465 “would be more manageable if gas prices weren’t so high.”

Tivadar would rather trade in his SUV than deal with the hassle of selling it himself, and he plans to visit other dealers to see if he can get better trade-in value… [Read More]

[Chuck]

This may put a new meaning to "white elephant".

[phoebeisis]

No big surprise here.12 months ago,I had to sell A 2003 Pilot(easily got 22 mpg in high speed-73 mph- interstate driving-heavily loaded with a bike rack and carrier on the back.I replaced it with a 1998 Suburban with 195,000 miles.The Suburban was in excellent shape-the owner had spent $4000 in the last two years on a transmission rebuild,AC rebuilt, hoses,belts,alternator-he had the receipts.It was still worth just $2900.If I sell it, it probably wouldn't sell even for the $2500 I would ask.The Pilot to Suburban switch netted $12,500, but it was a trade I would have never made except for the $$ problems.

There are 350 Suburbans on ebay today;they still occasionally sell on ebay, but only about 1 in 5 reaches reserve.Even experienced dealers apparently have beeen caught by the suddeness of the drop in demand. They shouldn't have been; we went through the same thing in 1979, but the drop was quicker-almost overnight.All the V-8s-Big 3- became close to worthless,and Honda and Toyotas sold for 33% over MSRP. $2000 markups on $6000 cars were common.

If you NEED a Suburban-wait about 2 months-it will be raining Suburbans.They do make more sense as a second car than a pickup.It can carry 4x8 building material with the lift gate closed-just like an 8 foot bed pickup.They are cheaper than pickups now.I doubt there are many potential buyer here.For a 2000 mile per year second car/Home Depot/haul stuff vehicle-they make sense-used-for some folks. If we didn't have 4 cats,a leggy greyhound, 3 adults and lots of stuff to occasionally evacuate,I wouldn't own one.Blame the cats-Phoebe does(the dog). For older ones-1999 and older-once they need a serious repair-even a radiator/AC -they become scrap/salvage vehicles-literally not worth spending $1000-$1500 to fix.
Charlie

[laurieaw]

i have wondered about this as i see more and more FOR SALE signs on FSPs in the area. who's going to buy them? what will happen to these hulking piles of sheet metal? seems like it's a lose-lose situation.

or perhaps i could pick one up for a song for my once monthly treks to fleet farm for big stuff, or the store to get 50 lb bags of grains for feeding my critters........or not. i would hate to have anyone think i was that dumb.

[deezle]

I feel sorry those who've owned SUV's for a few years and are now watching their vehicle's value sink like a boat anchor. These owners are the victims of marketing campaigns by the automakers to sell high-profit-margin vehicles, and were likely oblivious to looming oil price increases and environmental concerns.

Having said that, I must say that I feel utter contempt for those who are still buying new SUV's. Gas prices are now in their faces at the pumps (and never going back down), and environmental concerns are all over the media. If anybody is still buying an SUV, they deserve to watch both their operating and depreciation costs skyrocket.

The workers who are now being laid-off at assembly plants are the real victims. GM, Ford, and Chrysler have known for years that peak oil was looming and that guzzlers were obsolete----they should have been bringing new vehicles to market and retooling the factories for modern realities. Now the employees will suffer because of management's incompetence.

[lamebums]

I'm not surprised.

http://cincinnati.craigslist.org/car/

Tons of FSP's on there these days.

But not a lot of old Honda Accords or Civics, Toyota Corollas, Ford Escorts, or other fuel-efficient cars. Or if they are, they're seriously marked up.

And they will say "good on gas" or "fuel saver".

[bestmapman]

Maybe the price of those FSP's will drop so far it would make sense to buy one for the 2 or 3 times I need one in the winter. Lets say $500.00 for a 2007 Tahoe. I might be interested. But it would have to come with a full tank of gas. LOL.

[lamebums]

Originally Posted by bestmapman

Maybe the price of those FSP's will drop so far it would make sense to buy one for the 2 or 3 times I need one in the winter. Lets say $500.00 for a 2007 Tahoe. I might be interested. But it would have to come with a full tank of gas. LOL.

You know you're having a bad day when it cost more to fill up your car than it did to buy it.

[lamebums]

Originally Posted by bestmapman

Maybe the price of those FSP's will drop so far it would make sense to buy one for the 2 or 3 times I need one in the winter. Lets say $500.00 for a 2007 Tahoe. I might be interested. But it would have to come with a full tank of gas. LOL.

You know you're having a bad day when it cost more to fill up your car than it did to buy it.

That reminds me of something. Every time you've bought a used car, ever noticed the tank is almost empty? That happened when I got my Echo--it had an eighth of a tank, if that.

[phoebeisis]

Laurie,
Older ones-1999 and older, will frequently be scrapped when they need a moderately expensive repair-say $1500 or more.The local Chevy dealer wanted $700 for a new radiator,and another $400 or so to install it.Same story on a simple brake booster-$430+ $260.Redoing an AC system is close to $1000 from a non dealer repair shop-maybe $1500 from a dealer.

These simple repairs will put paid to older SUVs.Many will just sit in front of the owner's house until he ebays some parts out,and then has it towed ansd scrapped.


Middle middle class folks who bought new from 2000-2005 will have their standard of living dramatically lowered by their car!! They can't sell it,can't trade it,but they have to feed it!!They will be upside down on their loan until 5 minutes before it is paid off.My 1998 cost the PO $30,000-and it isn't fancy-no leather etc).The 2000-2005 Suburbans sold for about $35,000 new!!Imagine that note(maybe $600 month over 6 years) on top of a -$600/month to $800 month gasoline bill.
Their car will take an extra $300-$400 month out of their pocket, but they will be stuck with it for years.
Charlie