mikeyb
07-13-2005, 02:17 PM
Gas costs stall used truck sales<!--/head-->
<!--deck-->High pump prices and rebates create glut, making it tougher for sellers to unload vehicles.
SUV and pickup truck owners -- already stung by rising gasoline prices -- are paying another penalty when it comes time to trade in or sell: falling resale values for the gas-thirsty vehicles.
The resale value of large SUVs and pickup trucks is slumping in response to a supply glut, lower demand, higher gasoline prices and lower sales of new SUVs and pickup trucks, analysts say.
Automakers now have to boost discounts on new SUVs, hurting prices for new and used models.
According to www.edmunds.com, (http://www.edmunds.com/) an online shopping guide, trade-in values on trucks and SUVs have dipped while dealers are offering larger incentives to people trading in compact cars. The average trade-in value of a year-old SUV, for example, is $24,374, down about 5 percent from a May 2004 average of $25,651. Trade-ins for 3-year-old SUVs have waned nearly 8 percent, from $18,097 in May 2004 to $17,573 today.
Roy Holderbaum's love affair with his 1993 GMC Yukon recently came to an abrupt end when his gas bill shot to $100 a week. Now, he just wants someone to take the hulking SUV off his hands.
"It's a gas guzzler. I'm selling because I can't afford to drive it back and forth to work," said Holderbaum, 23, of Lenox Township, who has a 20-mile commute to his job in Chesterfield Township.
But many owners of large SUVs are finding it harder than ever to unload their rides with gas prices above $2 per gallon, a glut of used SUVs on the market and consumer tastes shifting toward smaller, more fuel-efficient models.
"If the rebate on a Chevy Suburban goes up $1,000 this month, usually the Suburbans sitting out there in our auction lane all of sudden lost, maybe, $500 worth of value," said Tom Kontos, chief economist at ADESA Inc., a Carmel, Ind.-based firm that tracks wholesale prices of used vehicles.
The drop in trade-in values for large SUVs is another indication that large SUVs are losing their appeal with American consumers.
The big trucks that were the family vehicle of choice and a major source of profits for Detroit automakers during the 1990s still account for more than 1 million annual sales. But the segment has taken a hit since 2004 with competition from car-based SUVs with better gas mileage and a failure by automakers to update aging models.
While no one is ready to pronounce the death of the Chevy Tahoe or Toyota Sequoia, consumers trying to sell large SUVs are seeing firsthand that Americans are not nearly as interested as they once were in the full-size family haulers.
"I thought for sure I'd sell (mine) right away," said Holderbaum, who has spent about $10,000 over four years to upgrade his Yukon. "But nobody wants to pay for that kind of gas."
Last week in Metro Detroit, regular gas sold for an average $2.249 per gallon, up nearly one cent over the previous week, and 40.5 cents higher than a year ago, according to AAA Michigan.
That means for large SUVs with a 25-gallon tank, the current tab to fill up is more than $10 higher than it was this time in 2004.
Rising gas prices may help explain a recent glut in large SUVs for sale by private owners.
Autotrader.com, an online vehicle seller based in Atlanta, has more than 100,000 more SUVs listed in online classified ads today than it did a year ago, according to spokeswoman Louise Barr.
But owners of big SUVs may also be dumping their vehicles because they foresee trouble in new large SUV sales, which are plummeting despite rebates of more than $4,000 by some manufacturers.
Demand for new full-size SUVs has declined 12 percent this year, a sudden drop that has contributed heavily to the profit malaise affecting Detroit automakers in recent months.
And as automakers pump up rebates, the side effect has been that the value of large SUVs has fallen.
That's good news to Ron Zontini, vice president of Motor City Auto Auction in Fraser, who has found it easier to sell some big SUVs to dealers and individuals now that they're at bargain prices.
"With us, if gas prices are high, people are going to buy those SUVs a lot cheaper," he said. "We get rid of them as fast as we get them in."
By contrast, the value of used compact cars such as the Toyota Corolla and Honda Civic has risen in each of the last 11 months and is now 14.2 percent higher than it was a year ago. That's compared with a year-over-year decline of 4.2 percent in the wholesale price of full-size SUVs -- the steepest drop of any vehicle product segment, according to ADESA.
"When you look at the contrast between compacts and full-size (SUVs), it has to be driven in part by gas prices," said ADESA's Kontos. "Why else would there be such polarity?"
Lower trade-in values for large SUVs and high gas prices may still take a while to affect private sales.
In Michigan, for instance, the average price of a used SUV is about $15,600, compared to about $14,900 for the same vehicle in April 2004, according to autotrader.com.
"Certainly, the perception is out there that SUVs are worth less because gas prices are so high, and public perception influences the trade-in value from dealers," said Jack Nerad, executive market analyst with Kelley Blue Book.
"But that's not necessarily true for private sales."
That doesn't mean people are rushing out to buy big gas-thirsty trucks, either.
Joseph Galloro of Riverview has been trying to sell his Chevrolet Silverado pickup since January.
"It's sluggish all right, just like houses," he said. "I've never seen it like this."
http://www.detnews.com/2005/autosinsider/0507/12/A01-243409.htm
<!--/deck--><STORYTEXT>
<!--deck-->High pump prices and rebates create glut, making it tougher for sellers to unload vehicles.
SUV and pickup truck owners -- already stung by rising gasoline prices -- are paying another penalty when it comes time to trade in or sell: falling resale values for the gas-thirsty vehicles.
The resale value of large SUVs and pickup trucks is slumping in response to a supply glut, lower demand, higher gasoline prices and lower sales of new SUVs and pickup trucks, analysts say.
Automakers now have to boost discounts on new SUVs, hurting prices for new and used models.
According to www.edmunds.com, (http://www.edmunds.com/) an online shopping guide, trade-in values on trucks and SUVs have dipped while dealers are offering larger incentives to people trading in compact cars. The average trade-in value of a year-old SUV, for example, is $24,374, down about 5 percent from a May 2004 average of $25,651. Trade-ins for 3-year-old SUVs have waned nearly 8 percent, from $18,097 in May 2004 to $17,573 today.
Roy Holderbaum's love affair with his 1993 GMC Yukon recently came to an abrupt end when his gas bill shot to $100 a week. Now, he just wants someone to take the hulking SUV off his hands.
"It's a gas guzzler. I'm selling because I can't afford to drive it back and forth to work," said Holderbaum, 23, of Lenox Township, who has a 20-mile commute to his job in Chesterfield Township.
But many owners of large SUVs are finding it harder than ever to unload their rides with gas prices above $2 per gallon, a glut of used SUVs on the market and consumer tastes shifting toward smaller, more fuel-efficient models.
"If the rebate on a Chevy Suburban goes up $1,000 this month, usually the Suburbans sitting out there in our auction lane all of sudden lost, maybe, $500 worth of value," said Tom Kontos, chief economist at ADESA Inc., a Carmel, Ind.-based firm that tracks wholesale prices of used vehicles.
The drop in trade-in values for large SUVs is another indication that large SUVs are losing their appeal with American consumers.
The big trucks that were the family vehicle of choice and a major source of profits for Detroit automakers during the 1990s still account for more than 1 million annual sales. But the segment has taken a hit since 2004 with competition from car-based SUVs with better gas mileage and a failure by automakers to update aging models.
While no one is ready to pronounce the death of the Chevy Tahoe or Toyota Sequoia, consumers trying to sell large SUVs are seeing firsthand that Americans are not nearly as interested as they once were in the full-size family haulers.
"I thought for sure I'd sell (mine) right away," said Holderbaum, who has spent about $10,000 over four years to upgrade his Yukon. "But nobody wants to pay for that kind of gas."
Last week in Metro Detroit, regular gas sold for an average $2.249 per gallon, up nearly one cent over the previous week, and 40.5 cents higher than a year ago, according to AAA Michigan.
That means for large SUVs with a 25-gallon tank, the current tab to fill up is more than $10 higher than it was this time in 2004.
Rising gas prices may help explain a recent glut in large SUVs for sale by private owners.
Autotrader.com, an online vehicle seller based in Atlanta, has more than 100,000 more SUVs listed in online classified ads today than it did a year ago, according to spokeswoman Louise Barr.
But owners of big SUVs may also be dumping their vehicles because they foresee trouble in new large SUV sales, which are plummeting despite rebates of more than $4,000 by some manufacturers.
Demand for new full-size SUVs has declined 12 percent this year, a sudden drop that has contributed heavily to the profit malaise affecting Detroit automakers in recent months.
And as automakers pump up rebates, the side effect has been that the value of large SUVs has fallen.
That's good news to Ron Zontini, vice president of Motor City Auto Auction in Fraser, who has found it easier to sell some big SUVs to dealers and individuals now that they're at bargain prices.
"With us, if gas prices are high, people are going to buy those SUVs a lot cheaper," he said. "We get rid of them as fast as we get them in."
By contrast, the value of used compact cars such as the Toyota Corolla and Honda Civic has risen in each of the last 11 months and is now 14.2 percent higher than it was a year ago. That's compared with a year-over-year decline of 4.2 percent in the wholesale price of full-size SUVs -- the steepest drop of any vehicle product segment, according to ADESA.
"When you look at the contrast between compacts and full-size (SUVs), it has to be driven in part by gas prices," said ADESA's Kontos. "Why else would there be such polarity?"
Lower trade-in values for large SUVs and high gas prices may still take a while to affect private sales.
In Michigan, for instance, the average price of a used SUV is about $15,600, compared to about $14,900 for the same vehicle in April 2004, according to autotrader.com.
"Certainly, the perception is out there that SUVs are worth less because gas prices are so high, and public perception influences the trade-in value from dealers," said Jack Nerad, executive market analyst with Kelley Blue Book.
"But that's not necessarily true for private sales."
That doesn't mean people are rushing out to buy big gas-thirsty trucks, either.
Joseph Galloro of Riverview has been trying to sell his Chevrolet Silverado pickup since January.
"It's sluggish all right, just like houses," he said. "I've never seen it like this."
http://www.detnews.com/2005/autosinsider/0507/12/A01-243409.htm
<!--/deck--><STORYTEXT>