SUVs Selling Like...McMansions On Wheels

Bloated Inventories. Longer time on the market. “Underwater” owners. Deep price cuts.

No, we’re not talking about housing…we’re talking about SUVs. With gas prices still hovering around $4, the parallels between the two markets are startling (NYT):

…in July, General Motors dealers had a 174-day supply of the Yukon XL/Suburban on hand, on average, up from a 92-day supply a year earlier. Inventory of the Chevrolet C/K Suburban nearly doubled over the same period, to 116 days from 63 days.

Just like hapless homeowners, countless car owners are now “underwater,” driving vehicles that are worth less than the balance on their car loans. And just like desperate homeowners, the sellers of S.U.V.’s are having to painfully cut asking prices.

But instead of being foreclosed on, like homeowners, SUV owners are exacerbating the problem themselves:

“It’s a very psychological decision,” [Jesse] Toprak, the director of industry analysis at Edmunds, said. “You pay for the car just once, but you go to the pump every week, so that almost seems more important to you. Every time you go to the pump, you just want to feel good about it.”

“When you trade in a large S.U.V. for a compact car, you’re selling low and buying high,” Mr. Toprak said. “For a lot of people that’s not really logical, but they’re not really running the numbers.”

Many home buyers didn’t run those numbers, either.

See Also:
General Motors (GM): Hummer Is Now Embarrassing To Us, Too: We May Sell or Kill It
Just In: $10 Gas Doesn’t Mean End of civilisation As We Know It!


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