SUV Owners Ready for Something Smaller
ALEX CHADWICK, host:
This is Day to Day. I'm Alex Chadwick.
MADELEINE BRAND, host:
I'm Madeleine Brand.
We just talked about the high price of oil. More than 130 dollars a barrel so, some owners of SUVs, well, they are having second thoughts. They are trying to get rid of them.
CHADWICK: Right. Well, good luck with that. It's tough to unload a gas guzzler these days because there is a glut on the market, too few buyers. From Seattle, NPR's Wendy Kaufman reports.
WENDY KAUFMAN: Two years ago Ian Vanrinen (ph) bought a used mid-sized SUV. He wanted the power of a V8 engine to pull his boat, but now he wants to swap his SUV for something smaller, and more fuel efficient.
Mr. IAN VANRINEN: And here we are at my Lincoln Aviator. I'm hopping in, and closing the door.
KAUFMAN: Vanrinen has been trying to sell his sport utility for weeks. It looks practically brand new, and has lots of bells and whistles. In the beginning, he says, there was a fair amount of interest, but not anymore.
Mr. VANRINEN: It's kind of a neat car for the right person, it's the perfect car. For everybody else, it's still a gas guzzling SUV.
KAUFMAN: Beyond the price of gasoline and concern for the environment, the housing slump has meant that many construction workers are no longer buying SUVs and pick-ups. What's more, there's a trend toward so-called crossover vehicles which offer SUV features, but on a cart chassis with better gas mileage. Vanrinen considered using his SUV as a trade in, and went to a couple of dealers. What he heard wasn't encouraging.
Mr. VANRINEN: They all pretty much told me that right now, the SUV market the way it is, the trade in value that they are going to be able to give me is probably going to be, you know, 5,000 dollars less than maybe what I want to get out of the car. And so, if I do choose to trade it in, just to get out of this situation, I'm probably looking at a 5,000 dollars hit.
KAUFMAN: In other words, he would get 5,000 dollars less then he owes on the vehicle. In automobile loan parlance, it's called an upside down loan.
Mr. MIKE LEVINE (General Manager, Honda Auto Center): It's no different really than subprime thing with the homes. When the land values drop, it puts people in a negative equity position, and with a car, it's the same exact thing.
KAUFMAN: That's Mike Levine, General Manager of the Honda Auto Center in Bellevue, Washington, one of the largest Honda dealers in the Pacific North West. He says that in the past 90 days, the number of customers with negative equity in their SUVs has shot up remarkably. The result of a kind of chain reaction.
Mr. LEVINE: We saw a used car market change dramatically where customers just weren't buying that higher-end used vehicle nearly as much. And real quick, what that did was back up all the dealers with inventory. The dealers stopped buying the inventory. The values dropped and, in kind of a free fall.
KAUFMAN: He adds, it's hard to look a customer in the eye, and tell him that although he owes 26,000 dollars, the dealership can offer only 14,000 on a trade-in because that's all it can sell it for in the current climate. According to CNW Marketing Research, nationwide in the month of April, the average used SUV took more than 66 days to sell, versus 48 days a year ago. Tom Webb, Chief Economist at Mannheim Corporation, which operates the nation's largest wholesale auctions of used cars, says he doesn't think the SUV market has hit bottom.
Mr. TOM WEBB (Chief Economist, Mannheim Corporation): It looks like in April, in terms of the SUVs, that the prices were starting to bottom out, that the market was starting to clear. But so far, in the first ten days of May, it wasn't good.
KAUFMAN: Prices for full-sized SUV's were still going down, meanwhile prices for compacts, were up. In the current environment, those who want to buy a used sport utility may be in luck. Stanley Ng of Toyota of Bellevue, points to the large collection of used SUVs on the lot, Lexus, Jeep Cherokees, Ford Explorers, and just about everything else.
Mr. STANLEY NG (Sales, Toyota of Bellevue): Right now, if you were a motivated buyer for a SUV, I think the management will do whatever it takes to sell you a car. You know, it's definitely buyer's market.
KAUFMAN: On the other hand, if you are interested in a fuel efficient Toyota Prius, you may not find one here, and if you want to buy a new Prius, you may have to put your name on a waiting list.
Wendy Kaufman, NPR News, Seattle.
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