Sales of both new and used sport utility vehicles (SUVs) have decreased dramatically since this time last year due in part to the rise in gas prices throughout the United States, an effect of the busy hurricane season.
The sale of new, large SUVs went down 48.1 percent in September from a year ago, and used SUV prices were 10.1 percent lower last month compared with September 2004, according to Manheim Auctions and the used-vehicle price guide, Black Book. Prices are likely to decline more in the coming months because dealerships are looking to unload them said Tom Webb, Manheim’s chief economist.
As stated earlier this month in a USA Today article, September sales of new Ford Expeditions were down by 60.6 percent, GMC Envoys by 58.4 percent, Ford Explorers by 57.7 percent, Chevrolet Suburbans by 56.6 percent, Toyota Land Cruisers by 51.8 percent, Toyota Sequoias by 46.8 percent, Honda Pilots by 25.8 percent, and Nissan Armadas by 20.8 percent. Automotive Lease Guide predicts that 2006 SUVs will hold 42.3 percent of their suggested retail value after three years. This figure is 2.9 percent below the guide’s projection last year for 2005 SUVs, making it the largest year-to-year drop for any vehicle segment.
As for used cars, Black Book quotes the typical wholesale price this October for a 2003 Ford Expedition Eddie Bauer 4×4 (in average condition) as $19,450, a 28.3 percent price drop from October 2004 (a typical decline in a year’s time would be 18-24 percent). In contrast, used, small cars are retaining their value; according to Manheim, a 2003 Toyota Corolla LE is selling for $100 more this month than last October.
Along with car manufacturers and dealerships, owners of large SUVs hoping to trade in their vehicles are also feeling the impact of the decreased sales. Dealers are offering less money for SUV trade-ins, so that person is getting less money back to finance a new car. SUV owners who wish to switch to a smaller car may be better off waiting until the cold and snowy winter months when four-wheel-drive vehicles are more desirable and their trade-ins could bring a higher figure.
Despite the declining sale numbers, several car manufacturers are downplaying the role of gas prices. Officials at Ford and GM claim that the September decrease in sales was the result of low inventories of 2005 models due to the success of the “employee pricing” discounts offered this past summer.
In the coming years, car manufacturers hope to boost SUV sales by offering more fuel-efficient SUVs with competitive prices and features.