SUV sellers find gas cost is hell on wheels
by Luke Davis on Aug. 12, 2008, under Edge, LocalResale prices plunge: pickup owners share pain
Sean Schoepflin of Pioneer Auto Sales says, "I'm trying to get rid of the trucks I have now, but I'm having a hell of a time doing it."
When Tucson’s average gas price passed $3 a gallon in January, Tucsonan Anthony Hill decided to sell his 2005 Dodge Ram SRT 1500 pickup truck and its paltry EPA fuel economy rating of eight mpg.
He’s had few takers.
“Even though I’m selling it for $8,000 less (than the Kelley Blue Book value), I’ve gotten maybe five calls, and all of them were no-shows,” Hill said.
Concern over high gas prices has resulted in stagnant SUV and truck sales, hurting private sellers and leaving Tucson’s car lots littered with unsold metal mammoths.
On the plus side, it’s never been a better time to buy a truck or sport utility vehicle if you can afford to fill the tank.
“I’m trying to get rid of the trucks I have now, but I’m having a hell of a time doing it,” said Sean Schoepflin of Pioneer Auto Sales, 1355 W. Wetmore Road.
“It’s anything V-8; the market has just been dead all over town,” he said.
Brian Kahn of Len’s Auto Brokerage, 2101 N. Stone Ave., said his dealership is similarly affected.
“A lot of people are staying away from gas hogs; if they have a big family, they’ll buy a minivan instead of a (Chevrolet) Suburban, or just suck it up and buy a car,” Kahn said.
Brand is not an issue to prospective customers, he said.
“It is purely miles per gallon, they ask ‘What’s the fuel efficiency?’ “.
The most fuel-efficient cars are in high demand, said Vince Lupo of Allstate Auto Sales and Leasing, 5341 E. Speedway Blvd.
“We get a lot of calls on Hondas and Toyotas; small imports and small domestics as well,” he said.
SUV sales have slowed significantly, Lupo said. “Across the board, all of them, even import SUVs like the (Toyota) Sequoia and (Honda) Pilot.”
The slowdown is tough on those looking to trade in larger vehicles, he said. The rapid decline in big-vehicle value has left many truck and SUV owners “upside down” on their loans, meaning they owe more than the vehicle is worth.
“I get some people that come in to trade down to a smaller car, but they have so much negative equity (in the SUV or truck) they have to decide if a trade is worth it, or if they should just pay the gas prices,” Lupo said.
Consumers also are avoiding new SUVs and trucks.
Truck and SUV “sales are down across Arizona,” said Bobbi Sparrow of the Phoenix-based Arizona Auto Dealers Association, a trade group representing more than 250 new-car and truck franchise dealers in Arizona, according to its Web site.
“Smaller, more economical cars are in demand right now,” she said. “The Toyota Prius is still on back order all over Arizona.”
The demand for more fuel-efficient cars is altering resale values nationwide.
A nationwide study from October to June of autos manufactured from 2002-07 found that full-size trucks retained just 51 percent of their resale value, and full-size SUVs retained 47 percent.
Subcompact cars retained the most resale value at 60 percent, according to the study.
“The truck market is best in places where there is a lot of construction and growth, which Tucson happens to be; they might hold value a little better there, but not enough to make a difference,” said Robyn Eckard, a spokeswoman for the Kelley Blue Book Co., which commissioned the study.
“Gas prices have people looking at long-term changes,” said Eckard, whose company publishes a new- and used-car pricing guide used by dealers and private sellers.
Sparrow cites cost as the reason for the shift.
“As soon as we hit $4 a gallon, (full-size sales) went down; there was an absolute mindset at that number,” Sparrow said.
The traditional dealer franchise practice of unloading unsold SUV and truck trade-ins through consignment and auctions to independent lots may be in danger because of inability of small dealers to sell on-hand stock.
“We won’t touch trucks at auction,” Schoepflin said.
“We see a lot of trucks and SUVs at the auctions, but that doesn’t mean anyone’s buying them,” Kahn said.
The hesitance of local used-vehicle dealers to buy SUVs or trucks at auction mirrors a national trend, said Tom Webb, chief economist for Manheim Consulting.
Manheim is the nation’s largest auto auction company, and its Tucson branch, 7090 S. Craycroft Road, has the biggest auction in the city.
The number of SUVs and trucks brought to auction has not changed significantly from June 2007 to June 2008, Webb said. “It reflects past numbers.”
The difference, he said, is in sale price.
“In June, compact car prices had a mileage-adjusted year-over-year price gain of 12.7 percent, while large pickups and SUVs both had annual declines in excess of 25 percent,” Webb said.
“Even bigger shifts for particular models and powertrain based on fuel efficiency (were seen),” he added.
Vehicles unsold at auction may be brought back at the same or a discounted price, on a different date, or returned to the dealer, according to the Association of Information Systems.
Even do-it-yourself private sellers are feeling the slowdown.
“It’s definitely been difficult,” Jeremy Meadows said of selling his 2007 Chevrolet Avalanche LTZ pickup, listed at $32,000.
“I bought a house and needed to get rid of the truck payment. It’s been two months; I get an average of one call a week,” Meadows said, “They ask some questions, then never call back.”
But while sluggish sales and dipping resale values are difficult obstacles for sellers, they may translate into great deals for buyers, Sparrow said.
“With all the promotions and incentives (new car) dealers are offering now, there might not be a better time to buy,” she said.
“The rosy side is that if you go to the lake and need a truck to pull your boat, you can literally save thousands,” said Kahn of Len’s Auto Brokerage.
An inventory search of the dealership’s Web site reveals a 2004 Chevrolet Avalanche pickup with a Blue Book retail value of $18,725 listed at $10,995. A 2005 Nissan Titan pickup valued at $21,405 is advertised at $15,990.
At Allstate, a 2007 BMW X3 nearly $10,000 below Blue Book value and a 2007 Hyundai Santa Fe nearly $2,500 less than the Kelley listing underscore a lack of immunity in the luxury and midsize SUV markets.
Total sales for new and used vehicles in 2007 were the lowest since 1999, according to the National Auto Auction Association.
“Even though there is reduced demand, someone is still going to want (an SUV or truck),” Kahn said.
“Some people’s lifestyles simply dictate buying a truck.”
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Best resale value
Kelley Blue Book Best Resale Value Award Winners 2006-2008
2006 – Three SUVs and six vehicles with EPA ratings less than 20 mpg/city
2007 – No sport utility or other vehicle rated under 20 mpg/city
2008 – No SUVs but two vehicles rated less than 20 mpg/city
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2003
Top 10 best-selling vehicles, according to Edmunds.com
1. Ford F-Series (including 150, 250 and 350)
2. Chevrolet Silverado (including 1500, 2500 and 3500)
3. Dodge Ram (including 1500, 2500 and 3500)
4. Toyota Camry (including sedan and Solara coupes)
5. Honda Accord (including sedan and coupe styles)
6. Ford Explorer (including Sport Trac full-size pickup)
7. Ford Taurus
8. Honda Civic
9. Chevrolet Impala
10. Chevrolet TrailBlazer
Average Tucson fuel cost early August 2003: $1.47 a gallon, according to Gasbuddy.com
2008
Top 10 best-selling vehicles in July, according to The Associated Press
1. Ford F-Series (including 150, 250, 350 and Super Duty)
2. Toyota Camry (including coupe, sedan and hybrid)
3. Honda Accord (including sedan and coupe)
4. Toyota Corolla
5. Chevrolet Silverado (1500, 2500HD, and 3500HD)
6. Honda Civic (including sedan, coupe, natural gas and hybrid)
7. Nissan Altima (including sedan, coupe and hybrid)
8. Dodge Ram (including 1500, 2500 and 3500)
9. Honda CR-V
10. Chevrolet Malibu (including hybrid)
Average Tucson fuel cost mid-July 2008: $3.81 a gallon, according to Gasbuddy.com
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Top-researched vehicles
Edmunds.com top 10 most-researched new autos of July, indicating possible consumer interest:
1. Honda Civic
2. Saturn Aura Hybrid
3. Toyota Prius Hybrid
4. Honda Accord
5. Smart ForTwo
6. Chevrolet Cobalt
7. Saturn Vue Hybrid
8. Toyota Corolla
9. Acura TL
10. BMW 3 Series
