Suv glut


#1

Why would someone be interested in buying a rapidly depreciating asset like a used gas guzzling SUV? Even if you pay low book value for the vehicle, the rapid depreciation is no bargain. If the book value let’s say is $30,000, I would pay no more than $15,000 for the SUV because I know it will continue to depreciate so fast. Does this make sense to you?



What’s the advantage of buying an SUV at a “bargain” vs paying a premium for a car that will have excellent resale value later on?



I don’t drive much either and the driving I do is in town driving, where I only get about 20mpg in the summer. It’s getting to the point of where it costs more in gas than it does to aquire goods at the store. I’m thinking about buying a small used compact car because it won’t depreciate as fast in resale value as a large sedan or SUV. I don’t understand the argument people make that you have to drive so many miles a year to break even in the savings for a compact car. If I have $20,000 to spend for a used car, why should I buy a large sedan over a small compact car? Also, why should I pay low book value for a gas guzzling SUV? If the book value is $35,000, the most I would pay is $20,000 because I know the vehicle will depreciate rapidly and so I need a “hedge” against future depreciation


#2

Some people really do need the space/towing capacity that large SUVs have, and since the market is flooded with them, they can be obtained for significantly less than otherwise. What’s happening now is the folks who bought them simply because they wanted to be big, bad, and intimidating are letting them go. Necessity is replacing desire.


#3

I agree, it only makes sense to buy a SUV if you really do need one, regardless of price. In addition, I don’t see any reason to buy any car brand new, because of the initial depreciation loss. IMO, the best value is to find a late model, low mileage used car that meets your needs and to keep it a long time.


#4

So then it sounds like the best thing to do is to buy a 3yr old low mileage compact car and then put about 30,000 miles on it and sell it 3 yrs down the line for not much less than you paid for it. I heard that used compact cars are now actually rising in value and people are paying obscene amounts for low mileage compact cars. Might be prudent to pay top dollar for a Prius just to avoid big depreciation.


#5

A used SUV(your statement says used SUV) is an excellent buy for those in need as the purchase price is lower than usual and choices are better than ever. The loss of value year to year as a percentage still remains the same whether a small - large vehicle. Once you get past the steep initial depreciation loss year to year is similar across vehicles.


#6

Not everyone is interested in resale value. I buy used cars (5yo or so), keep them for 12 to 15 years, and run them into the ground. When I’m done with them, they usually have 250k to 300k miles on them and are basically shot. Then I junk them.


#7

Nope, you’ll still take a hit on depreciation. I’m not exactly sure what you’re asking, but CTRUGBY has the right idea: buy what you need, maintain it, and drive it until it owes you nothing, many years down the line.


#8

I would buy a 3-5 year old car and keep it for 10+ years, as long as it doesn’t start costing more than it’s replacement value, or your needs don’t change. Flipping a car after 30K miles is unlikely to work, you will still have to buy another car in the same “market.” Personally, I wouldn’t buy into the prius fad unless I was doing a very specific type of driving.


#9

If you don’t need the capability of an SUV, then why would would entertain the idead of buying one? Personally I’m looking around for 2005-up F-250/350 Crew Cab V10 4x4 to replace my aging Bronco, Since nobody makes a full-sized 2 door SUV anymore this is the closest thing there is. Of course this would not be a daily driver, but more of a boat-towing, trash hauling, snow conquering, hunting/fishing, off-roading vehicle.


#10

I don’t own one of the HUGH SUV’s. I just own a mid-size 4runner…I wouldn’t have bought it unless I needed it.

I have a neighbor that owns a Expedition. And they’ll buy another one. They have 3 teenagers and 2 pre-teen…All in sports. It’s just used to drive everyone around. They MIGHT put 8k miles/year on it, so that equates to just a few hundred a year on gas more then a subcompact.

But I’ll admit there are a lot of people who own them and don’t need them. How many people have bought H1’s and actually NEEDED it. I’d buy a smaller SUV if I could. I’m about at the smallest I can get that can tow my trailer and haul my family on camping trips.


#11

A long wheelbase minivan with a small engine has just as much inside room and uses half the gas an Expedition does. Why does anyone need AWD and a brute of an engine to drive kids to their soccer game? It seems every gas guzzler owner says they “need the space”. Lee Iacocca invented the minivan for those who used to buy regular vans, but wanted more economical operation. Somewhere we are confusing reason with excuse.

A friend of my wife is married to a computer specialist who works close to home in town, and never sets foot in the wilderness. He “needs” a Jeep Grand Cherokee with the hemi engine to carry these heavy coputer parts home.


#12

A long wheelbase minivan with a small engine has just as much inside room and uses half the gas an Expedition does. Why does anyone need AWD and a brute of an engine to drive kids to their soccer game?

Because it’s also used to tow their 6000lb boat to the lake every weekend. There’s no way you can do that with ANY minivan ever built.

And when you’re only talking about a savings of MAYBE $400/year because of the so few miles they drive. That $400 is NOT going matter one bit.


#13

Besides what Mike mentioned about towing a boat, not every person is willing to drive a minivan simply because they are more economical. You have to WANT to drive the vehicle you buy, and as much as it’d be nice that nobody on the planet cared what kind of vehicle they had, that’s just not the way it is. Otherwise every person whould be driving the most shapeless, ugliest shoebox in existence solely because it’s the least expensive.


#14

Part of the issue is that many people don’t want to own three or four cars (like some of us do), so they buy cars to perform multiple tasks. It is not unusual for a family in my neighborhood to have a mini-van/crossover/sedan/whatever as their primary car and a SUV as their second car. Presumably they “need” the SUV for some type of activity (towing, off-road, whatever) and are not willing to buy another car for a second daily driver. As a result, one person drives the first car and the other ends up driving the SUV around. It’s worse if they also own some kind of toy (sports) car or motorcycle that they don’t use in the winter, or if they also have kids with their own cars.

I have an old Jeep that is used exclusively as a snow/ski car (mostly because I hate driving it); my wife and I both drive sedans; I have a motorcycle and sports car kicking around for no good reason; and I will probably be buying another car for my daughter at some point. After a while, it does get a little silly, I understand why some folks want to combine some of these cars. Fuel is still very cheap in the U.S. compared to the total cost of owning a bunch of vehicles.


#15

Resale value ??? Are you a car dealer ? I have no use for a cracker box rollerskate even if you gave me one. Where would I put my stuff ? ( 4 speaker cabinets,2 amps, mic stand, 2 guitars, wires, cables, lights, drum kit and the drummer ) And what is this foreign word “resale”? I have a 79 chevy short stepside 2wd, a 92 Ford explorer, and an 06 Ford escape hybrid. They’re not for sale, they serve different puposes, and when one dies I’ll be in the market for a good used vehicle that I can actually USE for what I need to do.


#16

You did not mention the towing requirement; that changes everything of course.


#17

I’m not a car dealer. I’m a value shopper who is always seeking the best value whether it is buying a car or buying at box of cereal. If someone gave me $20,000 and told me I had to buy a used car with it, even though I might like the Pontiac G6 GT a lot for example, I know that car will have very poor resale value in the future vs a used Toyota Prius, so I will buy the Prius instead in order to avoid losing money.


#18

We’ll have to wait and see how the Prius does in the resale market in a few years. I wouldn’t plan on buying one to “avoid losing money.” Any vehicle is a terrible investment, the best you can do is limit the damage.


#19

Ever hear of a trailer? Your stuff that you list is not heavy at all. A small enclosed trailer would do the job for you and could be pulled by a compact car and the drummer could go into the back seat of the car.


#20

Perhaps 1 in 10 SUVs purchased are really needed, to haul a camper or haul heavy materials often. The rest are “mine’s bigger than yours” suburbanites.

The truth is that few people buy vehicles based on any intelligent reasoning. They choose what they choose for emotional reasons.

And people are suckers. If the MSRP is $45,000 and they get $5,000 off they think they got a great deal, even if they could get basically the same vehicle without some of the useless bells and whistles for $30,000. And one that would serve the purpose just as well for $20,000.

I never could make sense of it. Physics is far easier to understand than people.