Support for Car Talk is provided by:

Discussion Rules

Login
Submit a Car Question

SUV GLUT

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

by: budd2049 06/06/2008 11:32:20 AM
Top 250 Contributor
Re: Re: Re: SUV GLUT
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.
by: Craig58 06/06/2008 12:34:15 PM
Top 20 Contributor
Re: Re: Re: SUV GLUT
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.
Updated: 06/06/2008 12:35:34 PM
Flag comment as inappropriate
by: Beadsandbeads 06/06/2008 6:59:04 PM
Top 250 Contributor
Re: Re: Re: SUV GLUT
What long wheelbase minivan gets 36 mpg on the highway?
by: ken green 06/06/2008 3:18:57 PM
Top 250 Contributor
Re: SUV GLUT
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.
by: SJGUY99 06/06/2008 5:16:12 PM
Re: Re: SUV GLUT
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.
by: Craig58 06/06/2008 5:22:58 PM
Top 20 Contributor
Re: Re: Re: SUV GLUT
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.
by: MikeInNH 06/09/2008 10:33:44 AM
Top 20 Contributor
Re: Re: Re: SUV GLUT

If you want to save money....The BEST way is to drive the vehicle until it's worth NOTHING...Then buy a new one....Forget about the resale value. Buying a car for it's resale value really is a poor financial decision.
by: SJGUY99 06/09/2008 10:10:08 PM
Re: Re: Re: Re: SUV GLUT
I agree with you want to buy a new car and drive it for 20 yrs. However most of us don't want to do that. How about buying a 1991 Pontiac 6000 with 100,000 miles on it for $1500 and then driving it until something major happens and then donating it? With great luck, you might have it for 3 years with just oil changes or with bad luck 6 months before the transmission goes out.
by: Wha Who? 06/06/2008 6:38:44 PM
Top 250 Contributor
Re: Re: SUV GLUT
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.
by: ken green 06/06/2008 7:08:17 PM
Top 250 Contributor
Re: Re: Re: SUV GLUT
Drummer owns the trailer. It goes on the 92 explorer when the entire band goes together. 5 guys plus the P.A., guitar amps, 5 mic stands, stage monitors, etc. 4X4 neccessary for mud and snow sometimes. It's only the 4.0 v6 but it "gits'er done" and I would have any thing less. The wife has an 06 Escape hybrid which specifically states no trailer towing in the owners manual.
by: ken green 06/06/2008 7:14:17 PM
Top 250 Contributor
Re: Re: Re: SUV GLUT
Drummer owns the trailer. It goes on the 92 explorer when the whole band travels together with the addition of the rest of the gear ; P.A.system, stage monitors, guitar amps, mic stands, backdrop, lighting, etc. 4x4 neccessary sometimes for both mud and snow. I wouldn't have anything less. This one's a 4.0 v6 but it "git's er done". The wife has an 06 Escape hybrid which expessly states no trailer towing in the manual.
by: the same mountainbike 06/06/2008 6:49:05 PM
Top 20 Contributor
Re: SUV GLUT
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.
Updated: 06/06/2008 06:49:34 PM
Flag comment as inappropriate
by: ken green 06/06/2008 7:27:24 PM
Top 250 Contributor
Re: Re: SUV GLUT
How true when you think about it. The "glut" seems to exist when people buy the immage and the want over the actual need. This is why I have three to pick form in the back yard, based on job needs of the day. The 79 pickup stays parked most of the time with a grand total original miles on it of 70.000. The 06 Escape hybrid is the daily runner to work and road trips. The 92 Explorer is the work horse.
by: benzman 06/07/2008 12:34:03 AM
Top 250 Contributor
Re: Re: SUV GLUT
You-tube clip shows how silly a Hummer H1 is for actually carrying things.
The Smart Car will amaze you as it out carries the Hummer.

http://www...re=related

Benzman
by: bscar 06/07/2008 12:40:49 AM
Top 250 Contributor
Re: Re: Re: SUV GLUT
It also shows how one can get over confident with their vehicle. Notice how he bought small items whereas she got a lot of larger items. Know your car and it's limitations.
by: Opera House 06/07/2008 5:42:10 AM
Top 250 Contributor
Re: SUV GLUT
I just took an 800 mile trip in an Explorer fully loaded with a carrier on the back for extras (a home chest freezer). 23.9 mpg through the hills of PA and NY, that is as good as any vehicle! It's how you drive. Trip cost me $30 more tan last year. Why would I go out and buy something different?
by: thechums 06/07/2008 10:55:45 AM
Top 250 Contributor
Re: SUV GLUT
First, Economy of Operation: What approach results in the least overall cost of ownership? As with brides and grooms, one size does not fit all, but in general a used car will cost you less over its life span than a new car. Depending on your actual use, a heavily discounted gas guzzler may perform better than a Prius for economy of operation. Try taking a few cuts at it with a calculator to see what brings you the least overall cost of ownership.

Second, Carbon Foorprint: Some vehicles with anticipated high longevity and superior accident avoidance features delivering 22 MPG, may have a lighter carbon footprint than a 45 MPG vehicle that has fewer accident avoidance features and a shorter anticipated lifespan. Here, a 4-runner may have a ligher carbon footprint than a Prius. We don't know because no one (that I know of) is doing such total-life-cycle calculations.

Third, What do you Really Want to Own?: Whatever the form factor, and whatever the image you want to project, in my experience quality pays off over the long term. In short, if you want a minivan then get a Honda. If you want an SUV, try Mercedes, Acura, Toyota or Nissan. Ditto if you want a sedna or sports car. As in the Anderson Windows ad, "When do you want to pay for your car, now, or every time you turn around?" Last, not only do the quality makes last longer, they also tend to deliver a safer, and more enjoyably experience every moment of use (our 18 year old Lexus LS400 has 230K miles and still has the original exhaust system, suspension, alternator, and the paint and leather look like new).... how good is that car? It has probably been the most economical car we've ever owned.

Just my dos pesos.
by: bscar 06/07/2008 9:36:22 PM
Top 250 Contributor
Re: Re: SUV GLUT
Second, Carbon Foorprint: Some vehicles with anticipated high longevity and superior accident avoidance features delivering 22 MPG, may have a lighter carbon footprint than a 45 MPG vehicle that has fewer accident avoidance features and a shorter anticipated lifespan. Here, a 4-runner may have a ligher carbon footprint than a Prius. We don't know because no one (that I know of) is doing such total-life-cycle calculations.  


I don't remember which website it was, but it showed that an H2 was actually producing less overall emissions than a Prius, including the emissions from the making of the vehicle
by: Docnick 06/09/2008 11:54:06 AM
Top 20 Contributor
Re: Re: Re: SUV GLUT
The website that villified the Prius was an example of the best junk science and scientific fraud I have ever seen. The essence of the claim was the emvironmemntatl damage done by International Nickel in Sudbury, Canada, which, IN THE PAST, put a lot of SO2 into the air and ran a really dirty operation. In those days, Inco supplied nearly 90% of the world's nickel, a very strategic material.

Since that time, nickel is produced in Indonesia, Guatamala, Polynesia, and many other places. Those plants are very clean as is the current Sudbury plant. So those claims are a misrepresentation of the worst kind. You could certainly claim that the 50s chrome loaded monsters had a bad environmental footprint.

The second intentional misrepresentation is that the manufacture of a car represents the major carbon footprint. We've pointed out in previous posts that on average the manufacture of a car takes only about 15% of the TOTAL LIFE CYCLE ENERGY DEMAND!!! This includes the spares for the repairs and manitenance and all the fuel and lubricants. If you don't believe me, contact the Society of Automotive Engineers (SAE), who have studied this subject to death!

So, a Prius, which gets at least 2x the gas mileage of a mid size Hummer, would have to incur 57.5% (1-.85/2)of its life cycle energy in its manufacture, or 57.5/15=3.83 times the energy of a Hummer. This argument is so ludicrous that we will spend no more time on it.

It always puzzles me how otherwise rational and intelligent people lap up junk science, outright lies, and distortions in order to either prove a point or to get something for nothing.

Although I believe in wearing out a car once it is built, there are circumstances where scrapping it before the end of it's life makes sense. A pre-catalytic conerter 1970 full size V8 car is worthy of being scrapped, no matter what condition it's in.

If you own a side-by-side 1970s frostfree fridge, which consumes 2600 kwhrs per year, you would do well to have it recycled, since a new one uses only 550 kwhrs!


by: bscar 06/09/2008 7:36:55 PM
Top 250 Contributor
Re: Re: Re: Re: SUV GLUT
Well, it depends on the car. If it were something like a 1970 Challenger or Imperial, I wouldn't send it to the scrap yard, I'd actually SAVE it from the scrap heap..

RSS
Powered by Public Interactive