NY Times Says: "Keep Your SUV"

Your neighbors may turn up their noses, but keeping your gas-guzzling sport utility vehicle, or buying one coming off a lease, may be a smart move.

The fact is that not many people want your big vehicle right now, if Friday's new auto sales data are any indication. Total S.U.V. sales were down 43.3 percent this July from a year ago, according to Autodata, an automotive information services company in Woodcliff Lake, N.J.

As for used vehicles, while they almost always fall in value over time, Jack Nerad, executive editorial director and executive market analyst at Kelley Blue Book, says that the rate of depreciation on large S.U.V.'s over the last six to eight months has been about twice what is normal.

Given the plummeting demand for big vehicles and the rise in gas prices that is responsible for the market turmoil, it is probably tempting to ditch your own large vehicle and trade down to something smaller.

But many experts suggest sitting tight, for a variety of reasons.

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Comments

[TheJibreelaMonsters]

I plan one buying one... however I also live in a very inclement area called Buffalo, NY!

[alamacTHC]

The problem with the NYT article is the implicit assumption that we have a duty to act in a manner which minimizes pain, regardless of the long-term effects on the environment and our economy. We have a duty to get into more fuel-efficient cars. I traded my Suburban for a Honda 2 years ago even though I only drive about 5000 miles a year. There is no way I've made up the monetary loss over what I would have paid in gasoline; and as I sit here watching Tropical Storm Edouard whip around me here in East Texas, I think it would be nice to still have the big vehicle in reserve. But I am happy with my decision because I know that I have done the right thing.

We shouldn't focus on the bottom line but on reducing fossil-fuel use. If we had a sane government, we would have policies which help ease the pain. But we need to bite the bullet anyway and DUMP THE SUV's.

[KPinSEA]

Actually the question is whether, with your driving habits, you'll ever make up for the large energy investment that manufacturing your new car represents. Metal was mined, refined, shipped ... plastics created ... robots burned electricity assembling parts ....

I think many people would save more energy just by keeping their existing car for 10 years instead of getting a new one every 3-4 years, so long as that existing vehicle is properly maintained and depending how many miles they drive per year.

[Nitehawk]

Keep your SUV, you can live in it when they repossess your home.

[AbbieHoffman2]

But did you even look inside an Hummer H2? - THERE'S NO ROOM TO LIE DOWN! ANYWHERE! 6680lbs of rolling idiocy. I have been planning on living in my 69 VW bus for a while now. Very comfortably, I might add.

[DRaymond]

The cost differential cited in the article between a three year old SUV and a new economy car isn't fair because you are getting a three year newer car. A fair comparison would be a three year old SUV with a three year old economy car.

Or keep the SUV and ride more public transit, or bicycle or get a scooter. Buying a scooter would likely cost you less than the differential to go from your SUV to a prius, and for the very large percentage of the time you are using the scooter you get better mileage thanthe Prius.

And then become an eco-enabler.Let your friends know that they can borrow your mostly idle SUV when they actually need something that big for the price of a tank of gas. Then they can all buy small cars or scooters.

[KenGirard]

If you have a three year old SUV and you trade it in what are you going to buy to replace it?
Most people would be getting something brand new, so you compare the old car with it's replacement.

But I agree with the loaning out the big car idea.
My temporary sulution for the future is electric cars that have 60-85 mile range, and then renting a gas powered car when you need to cover more miles then that in a day.

[SneathLane]

When you realize you've made a mistake that hurts other people, including your children and grandchildren, it's best to rectify the mistake quickly.

We've all known that SUVs produce more CO2 per mile than more efficient cars - if you bought one anyway, getting rid of it is a good idea, even if it costs you some money. Trashing it would be best, not selling it on to someone else who'd use it to keep pumping out that CO2.

This isn't economics, it's ethics. Ethical considerations aren't popular among SUV buyers, I know - but SUV owners sometimes have a conscience, and eventually decide to act more humanely.

[mamacat]

The biggst mistake was in going into the SUV in the first place. Now that we are stuck with it, one needs to think about a phased, orderly withdrawal, maybe over 16 months, into something that is less costly and more productive. To stay in the SUV has drawbacks, but a precipitous withdrawal may be unwise. Let's hope we all learned our lesson, and don't get tempted into macho SUVs again.

[sandiegoconservative]

I am so glad my wife has a safe, reliable SUV. Otherwise she could easily get killed at her job. I say yeay! for the SUV!

[thedirtman]

One word:

http://www.pbs.org/wgbh/pages/frontline/shows/rollover/

[captnEarl]

Drain all the fluids remove batterys and electronics and save it for your TOMB!

[KillTheMessenger]

Here is a simple piece of advice that works (because it works for me, it will work for you):

If your vehicle is older than 7 years AND consumes more than 20mpg AND you commute 15,000 miles per year, trade it in for a real hybrid like a Prius or Honda Civic Hybrid. You will end up with significant savings.

If one of these conditions is not true, you need to calculate savings for yourself. And even if the result is a net wash, you are going to be better off with a hybrid. The risk adjusted value of the car (with the main risk being even higher oil prices next year) will be better than what you have now.

[drkazmd65]

Good rules of thumb KTM

At 8 years, but at 40mpg (real world) - I'm not quite ready to switch over. But for many it is a good idea.

[sandiegoconservative]

Good advice, but there is one exception that I am aware of that would make your analysis incorrect.

My Dad bought a Ford Festiva, 4 cylinder car in 1990, brand new, for just over 6k. He has driven it daily for 18 years now and has over 255k miles on it. The water pump failed at 150k and the alternator around 210k. Aside from these items, a torn cloth drivers seat, a small crack in the side mirror, and the normal maintenance like oil, belts, filters and tires (which are 120 out the door for all 4 with installation), he has no problems with it. And the car gets an average of 44 miles per gallon!

So, if you have a Festiva in good running condition, you might want to keep it.

[bryansmith]

On a personal finance note, there is really nothing to be gained from trading in. The money lost in the trade would more than negate the savings in most cases.

But if you can afford to trade, you should. Mostly because it is better in the long-run for the entire country.

[KillTheMessenger]

The assumption being that gasoline will stay at $4 for some time. If it happens to go to $5 or $6 next year, you will find the reasoning to stick to the vehicle being flawed. And to add insult to injury, you won't even be able to sell it next year and the cost for a lower consumption replacement will have ballooned.

The kind of advice to hold on to what you got comes from the same place as advice to hold on to stocks that are loosing money because one day they might go up again...

:-)

[oldGunny]

A dealer friend of mine told me that they are shipping SUV trade ins to Mexico, where gas is still below $3/ gal

[MajorKong]

I've heard stories (urban legend?) of car dealers with so many pickup trucks on the lot that they won't even take one on trade in right now.

[BearsLeft]

Not urban legend. It is happening in Denver right now. Big SUVs are not accepted for trade-in at many dealers, you have to try and sell them privately.

On the flip side, my 3 year old Escape Hybrid small SUV is worth $23,500. I paid $31,500 and got a $2800 Federal tax deduction as well as a $2600 tax CREDIT from the State of Colorado. Best vehicle I've ever owned!

[sandiegoconservative]

Not an urban legend. There is a dealer I visited in the last week that is not taking them.

Interestingly enough, my wife and I are looking at a car right now, a Trailblazer for only 9.5k, excellent condition, 36k miles, all power with sport package. They can't move their cars right now!

[LiberalBuzz]

The problem with that report by Ron is that he is missing the big picture although he is correct on several points. The idea behind trading down is to help the environment, help bring gas prices down and force Detroit into making more fuel efficient cars.

IF all of that works then do trade down. Yes it might take years to make up the difference in the price of gas and what you paid on a personal level but the big picture is what is more important.

BUT do what you believe in.

[KillTheMessenger]

"BUT do what you believe in."

That is the worst economic advice one can possibly give. The correct advice would be:

"Make a spreadsheet with NPV and risk adjustment and then do what the spreadsheet tells you."

If, of course, you don't know what NPV and risk adjustment are and how one uses them in a spreadsheet to make financial decisions, you are kind of screwed.