Don't Panic: Perhaps You Should Hold On to That SUV

Over the summer, the clamor to downgrade to smaller cars from SUVs grew rapidly. Cars with four-cylinder engines accounted for 47.2% of new vehicle sales in June, up 8.8% from last year. Meanwhile, SUV sales — new and used — are tanking.

Don't go sprinting to the dealership to trade in that SUV just yet, though, no matter how tempting the thought of paying less for gas may be. The hard news is that your SUV may be worth so little that you're better off holding onto it for the time being.

Remember that gas is only one operating cost for a vehicle. Insurance payments, maintenance and your car payment all stay the same when gas goes up.

Let's say you're selling a 2005 Ford Explorer with 50,000 miles and only standard wear and tear. According to Kelley Blue Book, a dealer wouldn't offer you much more than $7,000 for the vehicle. When you're dumping a car for such a small sum, you have to consider how long it will take you to make up the money.

Furthermore, SUVs are worth so little right now, and small cars and hybrids have seen such a jump in consumer interest, that it’s created dreadful conditions for making that trade. Waiting for gas prices to drop and the value of your SUV to stabilize could save you money in the long run. The key is to make a smart decision based on the particular value of your SUV, how much it has depreciated, and how long you can afford to pay for a car that gets poor mileage.

Ditch the Gas Guzzler? Well, Maybe Not Yet (The New York Times)

Comments

This article proves that the way many people make the decision to switch to a more fuel-efficient vehicle is born of personal financial greed rather than what's good for the environment. If gas prices go down again, let's see if demand for gas sippers remains up.

exactly correct freethinker. do you actually think the majority of this country gives a rats a$$ about the environment? please, the bottom line is all that matters to most.

Far to many consumers are tricked by the Big 3 into buying a bigger vehicle than what they really need or want. The Big 3 spend millions of dollars in advertising every year to entice and emphasize their big vehicles. It's all about profit, profit, profit, while the environment suffers. Sure, GM attempted an electric car for market, but secretly they knew this car would never sell to the masses.

You would be LUCKY to get blue book value on an SUV! Blue book values show your car's value, but not necessarily you car's value in today's economy. You would probably get $5,500.

It's funny how people who are so pro-environment think sometimes. I'd like to see one of you trade in your vehicle with $10,000 or more in negative equity to support the environment. Meanwhile, you can't buy clothes for your kids because your car payment just skyrockted.

It's "environmentalists" who think like that who make me feel like I have less competition in American society.

if it were true about insuarance staying the same, why did my insuarance just go up for no reason

Something to consider: Yes, trade-in values on SUV's are horrible. However, automakers are giving new ones away with huge discounts - meaning there are huge numbers of late model SUV's out there. The value on the one in your driveway isn't going up, ever. It's going to continue to drop - *possibly* not as quickly, but definitely will continue to drop. In other words, if you want a car instead, do it. As long as it makes sense. The situation will *not* improve long term. Do you really think your 06 Expedition will be worth $5k MORE in 2 years?

Well Bowrider, here's how this pro-environment person thinks: I won't have to worry about trading in my gas guzzling SUV because I won't buy a gas guzzling SUV, therefore I can afford to buy clothes for my kids. See, my car payment didn't skyrocket, and I didn't help support a middle-eastern country by using more of a natural resource, however in a small way I helped protect the environment. Oh, and if you want competition join a bowling league.

There are other factors in play, besides gas price.

Automotive companies have had to tighten credit due to a squeeze on available capital in that market. That reduces the ability of people to buy expensive suvs and trucks. As credit gets tighter only those with higher income can afford the more expensive vehicles. It's a lot easier to come up with a 20% down payment, and meet the monthly payments, on a $16,000 Focus than a $35,000 Excursion.

A great number of the more luxurious suvs and other gas guzzlers were financed with 2nd mortgages. That market has dried out a great deal. It's especially true with the "sub prime" borrowers, as that market has all but disappeared.

Of course, leasing has also been tightened up. Again, those who previously could afford lease payments might no be priced out of the market.

Lastly, the image that suv and pickup drivers thought they got from driving these things has been reduced. "Well to do", "tough" etc has been changed to "idiot" for many. Self image had a lot to do with vehicle purchases in the U.S. and, right now, suvs are not creating the self image they did in the past.

All of the above, in addition to gas prices, contribute to a lessening in demand for the big, expensive suvs and trucks.

bowrider,

Not being a pro-environmentalist myself. But I can tell you what they would do.
They would not trade a SUV because they wouldn't have bought it in the first place.
Case closed.

Boyrider -
You can always buy clothes at the Goodwill.

I bought my truck a year and a half ago. I needed it for work. Since then, my work has changed and gas has gone through the roof. Meanwhile, the truck sits in the garage while I drive a 10 year old Civic.

I'd love to unload the truck but, would probably lose my azz in doing so.

I bought my truck a year and a half ago. I needed it for work. Since then, my work has changed and gas has gone through the roof. Meanwhile, the truck sits in the garage while I drive a 10 year old Civic.

I'd love to unload the truck but, would probably lose my azz in doing so.

same here. change in work and cannot sell truck for a decent price. I think some of the comments are true, it's value will continue to drop, so why continue to wait before getting a more fuel efficient vehicle?

Ok, so no "environmentalist" purchased an SUV when gas prices were averaging $1.99. C'mon?! So, if you're pro-environment, do you stop having kids at a predetermined number because of the environmental impact of each marginally produced kid? Is a minivan that gets 20 mpg on the highway going to make that much of a difference compared to an Explorer that gets 18?

Freethinker proposed an overgeneralization. I was countering his invalid argument. It's not always about financial greed. American people who appreciate their impact on the price of oil still buy SUVs because they need the utility of one. I wouldn't buy a Prius if I lived in a state that experienced winters of ice and snow. I wouldn't buy an Odyssey either. I would buy an SUV, though, one with 4wd.

In the words of Gordon Geeko, "Greed is good"

Especially in light of freethiker's comments.

I bust my hump for 60 hours a week to earn enough money for the government to take half, my landlord and service providers (power, phone, water, etc.) to take another 1/3.

And I'm some sort of evil greedy person for not spending the remainder on what YOU think is SOCIALY Acceptable?

The Nazi's are back folks, they're not wearing brown anymore they're cloaked in GREEN.

BTW, if you have an SUV and property, put it up on blocks, you're not gonna get any value out of it and you can save it for the ONE day of the year you need to use a truck.

Bowrider,

what did people who "need" SUVs do before minivans and SUV's were widely available? a Jetta wagon has exceptional cargo space and gets the same fuel economy as a regular small car (duh, it's a Jetta). and most people who drive SUV's drive around/ commute with just the 1 driver. are you kidding me?

and here in Boston, many people either have normal cars (like fuel-efficient Corrollas and Civics) anyway, or, if they want AWD, a little Impreza or even a Forester works great!

some people need a truck for work. got nothing to do with an SUV.

in short, SUV's are marketed like cell phones -- people did fine before they existed, but somehow we all are so dependent on them now and can't do without them!?!?! don't worry, in a few years these fat pieces of crap will all be too old for anyone to want to keep; the car makers will already have created a wave of "must-have" vehicles for us to gobble up.

and Infosaur, i don't see how your comment relates to cars? i work 90-100 hours a week, so what???

"C'mon?! So, if you're pro-environment, do you stop having kids at a predetermined number because of the environmental impact of each marginally produced kid?"

Yes, some people decide in advance how many kids they want to have. Call it family planning, birth control, environment, resource consumption, financial limitations, whatever. The bottom line is there are folks, some pro-environment, some indifferent, who don't NEED a vehicle with room for 8. And yet, they buy them anyway. They have a baby, so they sell the Civic because they think they NEED a minivan. That baby must be so big it takes up two rows of seats plus the resulting small cargo area.

Greed is behind all the hype: sell your car, lose a lot of money and buy a smaller car, preferibly and hybrid . They will sell you an overpriced small car and you will be happy of doing your good actions and it is very politically correct. It doesn't matter if that hybrid batteries pollute more before they are placed in the car, it looks good with the right crowd.

Come on, the same culture of use and dispose.
I agree that most of the people who bought large SUV didn't need them, just keeping up with the Joneses and buying trucks just to put some chrome in it.

By the way, I drive a 99 Escort. And I am not going to change it, until it falls into pieces.Next car, a sedan.

The analysis at Edmunds doesn't look at what would happen next month, which is how people are looking at this. Consider a 2004 Explorer with a payment of $450/mo, traded to a new civic. With the $7k trade, your payment would be around $200/mo, for an immediate monthly savings of $250 on your payment. You'll then have another ~ $175/mo of savings on gas, for $425 total savings per month for the year you had payments left. The savings on gas almost pay for the new payment themselves. Which car will cost more to maintain - tires would easily be 2x on the explorer? Which care would end up lasting longer? The trend away from SUVs isn't going away, and for many a switch will happen, it's just a matter of when.

bowrider,
"Ok, so no "environmentalist" purchased an SUV when gas prices were averaging $1.99. C'mon?! So, if you're pro-environment, do you stop having kids at a predetermined number because of the environmental impact of each marginally produced kid? Is a minivan that gets 20 mpg on the highway going to make that much of a difference compared to an Explorer that gets 18?"

Funny, what did families drive before the minivan and SUV come into the picture?

environmentalists arent so stupid to buy an 8 passenger suv when we have a wife and two children. i grew up jammed in the back seat with my brother and sister, and we did fine.
hey bowrider, give up your hummer and realize that you had a small package before you bought it.