SUV Trade-In Values Plummet
As U.S. fuel prices head for $4 a gallon, US News and World Report takes a look-see at SUV resale values. The mag divines that weakening demand has dramatically eroded resale values. (Ya think?) Citing a CNW Marketing Research study, USN&WR says March sales of used SUVs are down 14 percent from last year, after dropping eight percent in the first two months of this year. The story also kicks some journalistic tires at used car lots, where dealers no longer want to stock large vehicles. A Sales Manager from a Florida Chrysler/Jeep dealer says "some large vehicles are dropping thousands of dollars in value each month… Anything diesel has dropped $5,000 in the past five months." So where are all the body-on-frames going? Overseas, according to the Sales Manager of a Florida Nissan dealership. Apparently (hey it's a used car dealer), the store's been exporting about one car a month" in recent years. But this year they average "roughly 10." (Roughly? Would that be, say, five?) Add nasty depreciation onto huge operating costs, and it's not hard to not see the future of the SUV.
More by Edward Niedermeyer
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TrueDelta's panel members report when they trade one vehicle for another. The trend is strongly away from large and expensive. Not just SUVs, but among cars as well. I suspect that the entire luxury market might be about to take a tumble.
Karesh: Maybe, just Maybe, this will inspire/require luxury manufacturers to realize that SOME of us will PAY for a small luxury car... we don't all feel that Luxury = big biG BIG. Looking at Toyota's Yaris topped-out in Japan makes me a bit jealous.. such a Nice interior on such a Small car...get that? Nice + Small. But, it's hard to fully blame the manufacturers. We do run off of Supply & Demand, and if people refuse to understand that a small car can still whipe your rump just as well as a large car (while getting 30MPG in city), why would the manufacturers waste money on production? Sigh..
In Mexico, because of crime concerns and wild traffic, wealthy people buy big SUVs rather than expensive sedans or luxury crossovers. There are many Suburbans and Expeditions on the roads in wealthy areas of Mexico, but seeing a BMW 3-series is fairly rare. I've been to both rich and poor rural areas of Mexico and the roads are generally very good. I was especially impressed by the toll freeways that are perfectly pristine and smooth, brand new condition with wide lanes and big red-brick shoulders, but which cost $40-$50 US in tolls for a 4 hour trip. Very good engineering to. The MaxiTunel through the mountains north of Acapulco is 3km long, clean and well lit, and you can go through at nearly full highway speed.
M Karesh, I agree with your trend prognostication. I think that many people have decided they can't or don't want to compete in the car fashion contest anymore. It's out of hand. Impressive cars now cost sooo much money. And who will be impressed with a 911 or M5 anymore (besides the driver)? My wife and I play the 100k car game all the time. We rarely go a day without seeing a car that sells new for over 100k. The image one is projecting with a 50 to 100k car is likely one of financial foolishness instead of wealth. Better off driving a more value driven vehicle and renting the ferrari for one weekend a year.