Hold onto that big SUV
I can’t help myself. Whenever I see a Hummer on the road, I’m compelled to look at the driver to see what kind of a douche would drive such a thing. I have done this for years, long before gas cost $4 a gallon. I have no idea why.
But it now seems that the smart thing to do if you own one of these abominations is not to sell it. Apparently the market for used large SUVs is, to use a great phrase I read in the Wall Street Journal, “continuing to bore a hole to the center of the earth.” Predictably, with gas prices as they are, nobody wants to own a large SUV. And since car makers can’t move their inventory easily, they’re giving incentives and cutting deals. That makes it that much harder to sell a used one.
I’ve even heard stories of car dealers simply turning away large SUV trade-ins. They won’t buy them, period. As it is, 36% of SUV trade-ins are upside down. That is, the loan is larger than the current value.
But back to the point. Large SUVs are going for $1,000 - $3,000 less than they were last year. So even with gas at $4 a gallon, the incremental cost of fueling that thing for the year is still a better deal than selling into this market. So I guess when I take a look at that Hummer driver now, I can say they’re making the economically smart choice. What a laugh.
June 4th, 2008 at 4:03 pm
I think it is so funny that the SUV market is just collapsing on itself like a black hole. It makes giggle when people finally realize they should have looked for cars with gas in mind, not the status quo. I also hear that the Hummer Brand might actually be dropped. I would love to see small efficient cars everywhere.
June 4th, 2008 at 4:18 pm
I agree on the douche part!
June 4th, 2008 at 6:10 pm
Wow, you actually think SUV/Hummer drivers are douche bags? Nice offensive remark bud. Good luck w/ your blog - been reading it from the start, but now I will unsubscribe.
June 4th, 2008 at 6:32 pm
Hmm… I’m not so sure. Are you saying Hummer’s resale value is going to bounce back? Or is it better to think in terms of a sunk cost and move on? If finances were really an an issue, you’d think it would be easy to trade down in almost every expense category: gas, payments, insurance, etc.
June 5th, 2008 at 6:27 am
Let me clarify a couple of things.
First, this being America, you’re absolutely free to drive anything (legal) you want. I’m not for mandating small cars all around - I’m for letting the market sort it out. Some people have reason for large vehicles. Knock yourself out.
Second, I don’t have an opinion on the future of the SUV market per se. All I’m saying is that the incremental cost of fuel currently outweighs the reduction in trade-in value. Sean, I see your point, though, on other expenses.
June 5th, 2008 at 1:58 pm
First post I’ve read on your blog. Sorry to see you jump on the “All SUV/Large truck drivers are idiots” bandwagon. Yes, I paraphrased generously, but that seemed to be your point.
One of the great things about this country is that we are free. Free to make choices, good or bad. I love driving my full size pick-up, and I don’t plan to get rid of it. It is handy for hauling stuff to the dump, getting mulch, and helping friends move. Granted, I could do without that last one.
Now, my wife is home on bed rest while we await our twins arrival, so I have taken to driving her mini-van for longer trips. But when she needs her car again, I’ll be back in the truck.
The beauty of our free market system is that gas prices can make a difference. We are now seeing it getting to a point where it is actually affecting behaviors. At what price would gas have to be to make me stop driving the truck on a daily basis? I don’t know, but we must be getting close seeing as how I hop into a mini-van occasionally. I guarantee you if gas were $10 a gallon I would take a segway to work (5 miles each way).
Point is, no need to bash and sterotype all drivers of SUV’s. No one will listen to your argument except those that already agree with you.
June 6th, 2008 at 6:12 am
@ CommRE - That was not my point at all. Go back and reread the post. No where did I insinuate or write that “all SUV/large truck drivers are idiots.” Not even close.
Yes, I said I thought owners of Hummers are douches. I stand by that 100%. While you can haul trash and mulch with your truck, you can’t do anything like that with a Hummer.
The point wasn’t to be pro- or con-SUVs. I was just pointing out if you own one, selling one because of high gas prices probably wasn’t a good idea right now.
June 11th, 2008 at 2:50 pm
I am seeing a noticeable decrease in the number of SUVs on the road lately. I really pity the people who are getting into a cash flow crunch due to gas prices. They are having to sell their SUVs at a significant loss.
June 12th, 2008 at 8:27 pm
I completely agree with you that now is not the time to sell your SUV. Too many people are trying to sell them right now and the price of used SUVs is falling fast. To make matters worse, car companies are running special promotions on new SUVs to make them sell better. This also makes the price for used SUVs fall.
June 13th, 2008 at 7:02 am
ya i do agree with you. well i will say that you should wait for some time to look over the changes happening in market to proceed further.
June 14th, 2008 at 10:30 pm
One of my pet peeves is that people are so easily offended these days. I agree that there is definitely a correlation between the type of person that would drive a big yellow Hummer and the personality type of that person. Don’t we all know that? The type of person who would unsubscribe from your blog because of your comment is far too easily offended.
June 15th, 2008 at 7:38 pm
Some food for thought… how much longer until “compact cars” actually become an upgrade at car rental agencies? I mean, if I’m traveling and space isn’t an issue, I just might pay a little extra per day to save a potentially huge amount in gas. While driving today, the cheapest gas I saw in my neighborhood (87 octane) was $4.53/gallon… filling up a 20-gallon SUV doesn’t sound too good to me.
June 15th, 2008 at 9:02 pm
Douche indeed! Imagine the demand decrease we’d see if SUVs dropped off the road!
June 17th, 2008 at 2:30 pm
If you drive an SUV that gets 15 miles/gal and drive 15000 miles per year you use 1000 gallons of gas. At $4/gal that’s $4000.
A car that gets 30 mpg will use half the gas and cost $2000 to drive the same number of miles.
So, if “Large SUVs are going for $1,000 - $3,000 less than they were last year” then I don’t see how you can make the argument “even with gas at $4 a gallon, the incremental cost of fueling that thing for the year is still a better deal than selling into this market”.
The average of $1000-$3000 is $2000. That’s the same amount as you would save given the numbers I mentioned at the beginning. And going forward you would save that each year. There are plenty of cars that average 30 mpg in mixed highway and city driving.
So, unless you really need to drive the SUV for some specific purpose, the numbers you used in the post would lead me to conclude you still would be better off in the long run to sell the SUV and replace it with a more fuel efficient vehicle.
June 17th, 2008 at 10:09 pm
June 18th, 2008 at 6:41 am
@ RWH - Except I didn’t mention anything about 15 MPG or 15,000 miles driven per year. Yes, if you use the right numbers, you can ‘prove’ just about anything. In your example, I can see your point, but you make a whole host of assumptions to get there.
June 18th, 2008 at 12:48 pm
The only assumption I made is the average mileage driven by U.S. motorists and average mpg for a full size SUV in mixed driving.
If you drive fewer miles the numbers change. If your SUV is paid off and you think it will last many years the numbers change. If your SUV gets better than 15 mpg in mixed driving the numbers change, although not many do, particularly full size SUVs.
So as they say, you’re mileage may vary. But I think it’s worth adding to the discussion.
June 18th, 2008 at 9:16 pm
I don’t mind if folks want to drive gas-guzzling SUVs. I can understand the safety factor, et al. I do think that some have shown attitudes from their drivers seats “on high” while staring down at the rest of us. But that’s not confined just to SUV drivers.
My pet peeve is folks who clearly can’t multitask who drive (badly) down the road with a cell phone plastered to their ears. Arrrgghh.
June 18th, 2008 at 9:27 pm
Love the post. And to CommRE - get a life! Stop being so sensitive. Apparantely you haul mulch and whatnot so you need a truck, but guess what - most people who own those things aren’t hauling anything! And give me a break about the “free country” part. There are tons of countries that are free and wealthy and people don’t roam around like morons in huge SUVs just because they see rappers doing it. The fact is the bottom rung of American society is made up of people who do these kinds of things, they aren’t examples of the virtues of a free country, they’re the free-riders who we would be better off without. I hope gas prices continue to go up, I hope they go up to $10 per gallon so all these morons that live beyond their means and drive Hummers to try and look cool sink further and further into debt. Meanwhile I’ll continue to increase my net worth by six-figures per year and pay a few bucks to some redneck to haul mulch for me if I ever need it.
June 23rd, 2008 at 2:56 pm
Thanks, Festivus for reminding me why I live so far away from city morons like yourself. Where I come from, the only people driving large SUV type vehicles are rednecks and it is important to drive such a vehicle in order to do their job keeping people like you fat from fast-food burgers.
July 14th, 2008 at 1:25 pm
To Dakotan, trucks are one thing but Hummers have absolutley no use for any type of work . Except if you put your company’s logo on the side of it which I actually see a lot of. Another interesting note is that the local dealers here in southern California are charging a premium for compact cars like civics and scions, not to meniton hybrids. So if you sell your truck for 2k less thatn you want to, keep in mind that you’ll pay 2k more for a decent compact care than you might be planning to.
October 23rd, 2008 at 12:31 pm
I love the “this is a free country so people can drive whatever they want” retorts. Yes, but also being free, you can say nearly whatever you want as well. Thus, allow me to add a concurring opinion that H2 drivers are douchebags. I too am compelled to catch a fleeting glance of the kind of person who would not feel idiotic driving such a thing. At least a truck can be useful… but an H2? My Honda of nearly 12 years continues to pump out 30 MPG.