Kelley Blue Book recommends maybe not selling your SUV right now
Photo by Joguldi. Licensed under Creative Commons license 2.0.
We all know that sales and values of large vehicles are slumping - just ask Nissan about their Titan pickup. But if you're driving an SUV today and really hate watching the pump rack up all those dollars each time you get gas, Kelley Blue Book researchers have some advice for you: don't sell. Sound like a bad tip? Here's the reasoning, digested from a KBB press release (available after the jump):
Even though SUV and truck values have dropped about eight percent since September (an eight percent drop usually takes between 12 and 18 months), KBB thinks that these large vehicles are "nearing their minimum price points." When winter comes, KBB expects an "uptick in buyer interest in SUVs." Therefore, keep biting the bullet at the pump and, "Don't let emotions make your decision."
Of course, the value of this advice varies depending on what large ride you've got, whether or not you really need a vehicle of that size and how much you drive. Does it make sense for you?
Press Release:
Don't Sell Your SUV; Kelley Blue Book Data Reveals Costs May Outweigh Gains
IRVINE, Calif., May 29 /PRNewswire/ -- Increasing gas prices have encouraged consumers to trade-in their SUVs for smaller, more fuel-efficient vehicles, but it is important to examine the big picture before making a final decision. According to Kelley Blue Book (http://www.kbb.com/), the leading provider of new- and used-vehicle information, the SUV market has dropped more than 8 percent since September of last year. Kelley Blue Book data reveals depreciation between three to five thousand dollars in SUVs during the past six months. While depreciation is common, eight percent is generally seen over 12 to 18 months, not six to eight. Mid-size SUVs have dropped seven percent, while large SUVs have declined 8 percent. In addition, full-size trucks have depreciated eight percent along with the entire market.
"While it might be tempting to trade-in your big SUV after spending $100 to fill its gas tank, it is important you take everything into consideration before you decide to change vehicles or you may end up spending thousands of dollars to save hundreds," said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book and kbb.com. "Large SUVs and SUVs with four-wheel drive are nearing their minimum price points so we expect depreciation will slow, and we anticipate there will be an uptick in buyer interest in SUVs as we approach winter, contingent on regional factors and gas prices. Hanging onto your current vehicle and riding out the current gas prices could be the most economical answer."
Don't let emotions make your decision -- you might be troubled by your current gasoline costs, but costs associated with acquiring, operating and insuring a new vehicle will most likely outweigh them. Below are a few suggestions in determining whether to sell your SUV
* Is your SUV paid off? If not, be aware that you might be "upside down" on your current auto loan, owing more than it's worth
* Do the math -- look at the monthly payments for your alternative vehicle, check your credit and research all financing options
* Calculate monthly gas mileage for alternative used and new vehicles. Miles-per-gallon information and fuel-tank capacities are available on http://www.kbb.com/
* Choose wisely -- make the decision that best fits your needs without tiring your purse strings
About Kelley Blue Book (http://www.kbb.com/sitemap)
Since 1926, Kelley Blue Book, The Trusted Resource(R), has provided vehicle buyers and sellers with the new and used vehicle information they need to accomplish their goals with confidence. The company's top-rated Web site, kbb.com, provides the most up-to-date pricing and values, including the New Car Blue Book(R) Value, which reveals what people actually are paying for new cars. The company also reports vehicle pricing and values via products and services, including software products and the famous Blue Book(R) Official Guide. Kbb.com is rated the No. 1 automotive information site by Nielsen//NetRatings and the most visited auto site by J.D. Power and Associates nine years in a row. No other medium reaches more in-market vehicle shoppers than kbb.com; nearly one in every three American car buyers performs their research on kbb.com.
[Source: Kelley Blue Book]
Reader Comments (Page 1 of 1)
Tim 12:42PM (5/30/2008)
And oil is expected to reach $200/bbl WITHIN the next 12-24 months.
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Chad 12:46PM (5/30/2008)
It all depends how much equity on the vehicle. Let's say you still owe $10K on a SUV that originally cost $40K. Even if you can only sell it for $15K, you still come out $5K ahead. You can use that $5K to buy a used civic or corolla. You will certainly be downsizing to a more modest vehicle and will have lost money in the process, but it will not cost you anymore out of pocket.
This is just an example, I realize that everyone's financial situation is different and a lot of people can not do this because they are upsidedown on their car loan.
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James Bowe 1:02PM (5/30/2008)
if you are looking to sell and get an efficient car, the extra money you drop on gas while waiting until winter will surely offset any increase in value. I'm averaging 35mpg out of my 02 civic 4-door. At around 1000 miles per month, over the last 3 months it would have cost me $300 MORE to fill up a 19mpg SUV. You're talking about waiting 6-8 months? Your SUV will STILL lose value, and you will lose another $600-$800 on gas. Even if demand upticks, the value of your whip will at best stay the same, as you are talking about another 6 months in age and mileage. If you're looking to sell, sell....
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Karkus 1:17PM (5/30/2008)
That article might be right about holding on.
There is a very limited supply of efficient used cars on the market, and so they are becoming expensive (thereby offsetting the potential fuel savings). So holding onto the SUV is probably the smart thing to do, especially if you don't drive much (or if you own two cars and can shift most driving miles to the more efficient of your cars). But If you commute a long way each day, then you might have to dump your devalued SUV and buy a more expensive small car (or take the bus).
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Sasparilla 1:20PM (5/30/2008)
I think it all depends on where the price of oil goes. If it keeps generally rising in the future, SUV's will get harder and harder (and cheaper) to sell, not easier. KBB seems to think the price rises of Oil are a temporary thing and that they'll go back eventually...which doesn't seem like a very good bet.
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Lad 1:34PM (5/30/2008)
Used to be a guy named Bruce Williams on the radio who said "It's OK to take an immediate loss as long as you write it off as a learning experience."
I think a lot of us got caught up in the slick advertising and salesmanship of driving the latest trendy auto of the times and that was four wheel drive SUVs and huge Trucks.
Run the numbers and I think in most cases you will see it's better to unload the gas hog right now. There are reasons for some to have these cars, i.e., construction, towing, hobbies, etc. but as a DD, they no longer make sense.
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Bill 12:50PM (6/01/2008)
Given the fixed costs in a gallon of refined fuel, even $200/bbl oil is likely only a little over $5/gallon gasoline.
As the WSJ pointed out, many households keep the SUV for fun trips and add a small car for commuting/everyday trips.
They aren't as sexy as the Prius, but there are plenty of high mpg used Civics/Corollas/etc.
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Chris 6:11AM (6/02/2008)
I'll use an example from family. My brother in law has a large Dodge Ram pickup, averages 15 on a good day. He builds and renovates homes so he always needed a truck.
Well he saw my car (07 civic ex coupe), asked about my mileage (36+ on average), and the checked out the trunk space.
Well he has one in ADDITION to the truck. The majority of his days he doesn't have to haul anything to and from work sites. The trunk in the Civic is actually large enough to haul the tools he uses, most valuable ones are small, and he reserves the truck only for when he needs the bed.
What he told me is that basically every time he fills up the civic he can double the dollars on the pump to see how much he saved over driving the truck. So does it pay for itself? Well in November he spent over one thousand on gas for the truck, very close to that in December. With the large jump in gas prices since then he saves even more. The car is literally paying for itself and even making a "profit". All because he evaluated what he needed the truck for and now plans out his work around using the truck as little as possible.
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"Bitter" 7:04AM (6/02/2008)
Bla--blah--blah, all the bitching and whining. I filled up one of my diesel cars the other day. Let's do the math together shall we? ok--$5.299/gallon x 20/21st of a tank = Yep, you got it--$105.98 to fill up a car. Honestly though, it's fine. I get about 27mpg, it weighs roughly 4,700lbs., I can carry 5 people more comfotably than the average 5 passenger SUV, and carry almost as much stuff in the trunk. It works for me. And, yes, now I am aware that this has little or no relevance to the posting. Sorry.
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Rick 10:42AM (6/02/2008)
What's the alternative? They sit around unused, things go bad, rust takes a foothold. Then what? To the crusher, raw material for China, the primary buyer of scrap steel in the world. Side note: History shows Japan started to purchase allot of the world's scrap steel in the 1930's. The rest is history, but will history repeat itself?
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Jon 11:38AM (6/03/2008)
Chris,
Thanks for sharing the example of your brother-in-law's common sense.
Too many people see it as an either-or question, big car or small car. It's not, it's about the most efficient way to meet your needs.
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