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SUVs not the 'big' car anymore: Local car dealers see drop in SUVs and rise in hybrid demand
With gas prices hitting an all-time high -- ranging from $3.99 to $4.16 in Loudoun County – people are looking for ways to spend less on gas. One of the most obvious options is to get rid of the gas-guzzlers such as sport utility vehicles.
Tate Attia, finance manager at Easterns Hyundai of Leesburg, has heard and seen the recent trend of people trading in their SUVs for more economical cars -- but he can also speak from personal experience.
“I live 40 miles from work, and every three days I was spending $75 on gas, so I traded in my SUV for a smaller car,” Attia said. “I now pay $50 once a week [on gas].”
Attia took a hit of $7,000 trading in his SUV for his new four-door sedan -- but to him, it was worth it.
“No dealer wants to buy a SUV,” he said, speaking from his dealership position. “We have removed all profit on used SUVs because we don't even want them on the lot. We are lucky if we can give them away at invoice [pricing].”
The selling of hybrid vehicles is a different story.
When Easterns Hyundai gets any hybrid cars in stock, buyers at Easterns' 16 showrooms in the metropolitan area are ready to pounce.
“We get hybrids rarely,” said Attia, “but when we do get some in, it turns into a bidding war.”
Cars still moving
Over at CarMax Auto Superstore headquarters in Richmond, revenues for the first quarter of 2008 have risen, but the company has seen declines in both customer foot traffic and buyers' ability to get the credit to purchase a vehicle.
“The slowdown in the economy, the dramatic rise in gasoline and food costs, and the related impact on consumer spending adversely affected our first-quarter performance,” said Tom Folliard, CarMax president and chief executive officer. “For the first time in more than two years, we experienced a modest decline in customer traffic in our stores. Additionally, credit availability from our third-party nonprime lenders declined slightly during the quarter.”
Folliard added, “Despite the slower-than-expected sales, our data indicates that we continued to gain market share in the late-model used vehicle market.”
The declining market for the once-popular SUVs has had an impact on CarMax's business.
According to the company's first quarter earnings report, “wholesale industry prices for SUVs and trucks declined nearly 25 percent, which is approximately four times the normal depreciation expected over this period and well in excess of the depreciation expected over a full year.”
As of June 30, CarMax had 1,375 SUVs available, both new and used, ranging from $7,998 to $70,296.
Folliard said, “This is the most rapid depreciation of any vehicle segment that we have experienced in our 15 years.”
The earnings report also stated that if the current trends persist, “results for the full year [of the company's earnings] could be significantly below the bottom of our original earnings guidance range.”
CarMax had only two hybrid cars available June 30 – a 2006 Lexus RX 400h for $35,998 (31K) and a new 2008 Toyota Highlander for $36,816.
Great deals on SUVs
“With SUVs, [a buyer] can get a good enough deal that outweighs the $1 more in gas,” said Eric Kaiser, sales manager at Moore Cadillac Hummer.
He said the big sport utility vehicles have dropped in price significantly.
Kaiser said last week was a busy week for the dealership because of the deals the store has going on – 0 percent interest for 72 months vs. the typical 6.9 percent interest.
“This deal saves a buyer $15,832 over the life of the loan,” he explained.
Having Cadillac as part of the dealership has helped the store during these hard economic times, Kaiser said.
“We are able to maintain the same client customer base, but we are nowhere near where sales used to be,” he said.
Contact the reporter at lwolstenholme@timespapers.com
My wife drives a RAV 4 and I drive the minivan but if it snows then the minivan stays parked because the RAV 4 does an excellent job in the snow. I drove a small auto (Datsun) many years ago which got good gas milage at the time but once the snow came the car was useless so I traded up for a mid-size sedan (Camary) which did OK in the snow. Now that I am used to the RAV 4 on snow I won't be driving anything else come this winter and I have a feeling those that traded in their SUV's for a small or tiny car are going to be wishing they didn't. I saw a few small autos trying to get out of the parking lot after the first snow and most gave up trying. When Spring came I saw those same people with new autos; a SUV or a cross over.
Posted by livinginwonderland
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