Bill
05-24-2008, 04:10 PM
So, turns out millions of SUV owners are now upside down.
Since the value of SUVs have plummeted, they owe more than the SUV is worth. CNN was doing a nice video story on this.
And the car dealers can't sell the SUVs they have, no matter what deals they offer.
What a shame.
http://www.cnn.com/2008/LIVING/wayoflife/05/23/dumping.suvs/index.html
Jorge Fernandez strolls across the used-car parking lot littered with dozens upon dozens of sport utility vehicles the size of small tugboats.
SUVs like these are having a tough time selling with gas prices at all-time highs.
1 of 2 With gas at $4 a gallon, many have sat there since last summer.
"The cars are literally just sitting, and it doesn't matter how much you sell them for," Fernandez says of the SUVs and trucks nobody wants anymore.
"It's amazing. I've never seen it this bad -- ever."
Fernandez, a wholesale auto dealer who has been in the business for more than 20 years, says SUV owners are hit especially hard. The really large ones with V-8 engines that can get as little as 12 miles per gallon in the city -- like the Cadillac Escalade, Ford Expedition and Chevy Suburban -- are dropping in value by the thousands. Watch the sinking value of guzzlers »
The No. 1 reason for the sales slump is soaring gas prices, says Peter Brown, the executive director of Automotive News, the trade newspaper for the North American car industry.
For the first four months of this year, truck and SUV sales are down a collective 24.8 percent. SUV sales plummeted 32.8 percent while pickups dipped 19.9 percent, he says.
"If gas prices stay where they are at or continue to rise, the body-on frame SUV is an endangered species and the pickup truck as a personal car is an endangered species," Brown says.
How do owners react when they're told their once-$40,000-plus vehicles are now worth less than half that?
"When they find out what you think their truck is worth, they think you're trying to rip them off or something," says Fernandez. "Small cars are gone within a week; SUVs are sitting here since last summer."
David Lavi, the owner of a Toyota Tacoma pickup, is feeling that pinch. He put his truck on the market several weeks ago in hopes of downsizing. He bought it brand new in 2006 when gas prices were much lower.
"Once I do sell it, I'm going to get a smaller car -- maybe a Nissan Maxima or something smaller," he says.
He's hoping to get $23,000 for the fully loaded truck, which is higher than the estimated Kelley Blue Book value of $15,000 to $19,000 depending on how many amenities it has.
"No one has offered what I want," he says.
Automakers have noticed this trend to downsize.
Ford announced Thursday it was shifting production away from its longtime hallmark of pickups and SUVs in favor of smaller cars.
In making the decision, Ford said it believes gas prices will remain in the range of $3.75 to $4.25 a gallon through the end of 2009.
"We saw a real change in the industry demand in pickups and SUVs in the first two weeks of May," Ford chief executive Alan Mulally said Thursday. "It seems to us we reached a tipping point."
Since the value of SUVs have plummeted, they owe more than the SUV is worth. CNN was doing a nice video story on this.
And the car dealers can't sell the SUVs they have, no matter what deals they offer.
What a shame.
http://www.cnn.com/2008/LIVING/wayoflife/05/23/dumping.suvs/index.html
Jorge Fernandez strolls across the used-car parking lot littered with dozens upon dozens of sport utility vehicles the size of small tugboats.
SUVs like these are having a tough time selling with gas prices at all-time highs.
1 of 2 With gas at $4 a gallon, many have sat there since last summer.
"The cars are literally just sitting, and it doesn't matter how much you sell them for," Fernandez says of the SUVs and trucks nobody wants anymore.
"It's amazing. I've never seen it this bad -- ever."
Fernandez, a wholesale auto dealer who has been in the business for more than 20 years, says SUV owners are hit especially hard. The really large ones with V-8 engines that can get as little as 12 miles per gallon in the city -- like the Cadillac Escalade, Ford Expedition and Chevy Suburban -- are dropping in value by the thousands. Watch the sinking value of guzzlers »
The No. 1 reason for the sales slump is soaring gas prices, says Peter Brown, the executive director of Automotive News, the trade newspaper for the North American car industry.
For the first four months of this year, truck and SUV sales are down a collective 24.8 percent. SUV sales plummeted 32.8 percent while pickups dipped 19.9 percent, he says.
"If gas prices stay where they are at or continue to rise, the body-on frame SUV is an endangered species and the pickup truck as a personal car is an endangered species," Brown says.
How do owners react when they're told their once-$40,000-plus vehicles are now worth less than half that?
"When they find out what you think their truck is worth, they think you're trying to rip them off or something," says Fernandez. "Small cars are gone within a week; SUVs are sitting here since last summer."
David Lavi, the owner of a Toyota Tacoma pickup, is feeling that pinch. He put his truck on the market several weeks ago in hopes of downsizing. He bought it brand new in 2006 when gas prices were much lower.
"Once I do sell it, I'm going to get a smaller car -- maybe a Nissan Maxima or something smaller," he says.
He's hoping to get $23,000 for the fully loaded truck, which is higher than the estimated Kelley Blue Book value of $15,000 to $19,000 depending on how many amenities it has.
"No one has offered what I want," he says.
Automakers have noticed this trend to downsize.
Ford announced Thursday it was shifting production away from its longtime hallmark of pickups and SUVs in favor of smaller cars.
In making the decision, Ford said it believes gas prices will remain in the range of $3.75 to $4.25 a gallon through the end of 2009.
"We saw a real change in the industry demand in pickups and SUVs in the first two weeks of May," Ford chief executive Alan Mulally said Thursday. "It seems to us we reached a tipping point."