The Fallout Begins
Anita Sharpe on Culture
Even before Katrina, gas prices were moving into the 'ouch' zone. And those giant, gas-guzzling SUVs that seemed to cool -- in some circles -- just a year or so ago, are becoming white elephants. The Atlanta-Journal Constitution has a piece about one family having a hard time unloading theirs. Hit 'continue' to read the story.
SUV (Simply Unsellable Vehicle) BLUES\nAs fuel prices rise, owners of gas guzzlers find themselves stuck with big drains on their budgets\n\nBy MARLON MANUEL\nThe Atlanta Journal-Constitution\nPublished on: 09/01/05 \nMichael and Julie Curnick of Roswell are selling their 1997 Ford Expedition, an 8-cylinder monster with the power to haul six Jersey cows and enough interior space to hold, well, Jersey.\n\nWith their 16-year-old son learning to drive and family trips to Tennessee costing $75 with every fill-up, the time became right to sell. Expecting it to be snapped up quickly â€” SUV sales surged 11 percent in the first quarter of 2004 â€” the couple bought a classified ad that practically gushed: Eddie Bauer, 4WD, 137K, one owner, 3rd rear seat A/C VG condition $8,500.\n\n\nCharlotte B. Teagle/Staff\n(ENLARGE) \nIn the last month, Roswell residents Julie Curnick (above) and husband Michael have received only two calls on a classified ad for their 1997 Ford Expedition gas hog â€” and one was from a reporter. Meanwhile, gas could climb to well over $3 a gallon by this weekend.\n \n \nAnd with Hurricane Katrina, things will probably only get worse. A gas shortage in metro Atlanta is possible, experts say, and gas prices are predicted to top well over $3 a gallon by the weekend. It's all bad news for SUV owners, who can expect to get the silent treatment not only at the pumps, but at the resale market.\n\nThe average resale price of a large SUV has dropped 7.1 percent from a year ago, while the used car industry as a whole â€” which had trended up until a few months ago â€” decreased just 2.9 percent.\n\nWhen SUVs do sell, they're forced to settle for less money than the vehicle category fetched last year, said Alex Rosten, manager of pricing and market analysis for automotive Web site Edmunds.\n\n'God forbid I had an Excursion or something larger,' said Michael Curnick, a regulator for BellSouth, who still uses the Ford to haul supplies from Home Depot.\n\nWhat does that mean if you hang a For Sale sign on your honkin' big ride? Nobody calls you anymore. Seventy-five bucks for a fill-up? Hello? Are you crazy? Click.\n\n'Our timing is just terrible,' said Curnick's wife, now the dubious owner of a Toyota Sequoia, with its thirsty, 28-gallon tank.\n\nIn Suwanee, John Kim posted his family vehicle â€” a 2003 GMC Yukon Denali XL â€” for sale at Autotrader.com, owned by Cox Enterprises, parent company of The Atlanta Journal-Constitution.\n\n'I've been trying to sell it for a couple of months,' Kim said, 'but I'm not getting any calls. I thought it'd be faster.'\n\nHe first priced the vehicle at $35,900. He dropped to $31,900. With no one calling, he may go lower yet.\n\nFuel costs are eating him up. There might as well be piranhas in his 32-gallon tank.\n\n'I'm going with a smaller, more gas efficient car,' Kim said.\n\nIn East Cobb, Todd Lavelle, who owns a medical products company, has two sons, one who plays baseball, the other hockey. He needs on-the-road elbow room and drives a 2003 Chevy Suburban.\n\nHe wants to upgrade to a Cadillac Escalade. But after five weeks of advertising, he's had just two people come by to kick the tires on the Suburban.\n\n'I'm sure there's less of an audience now,' Lavelle said. He's trying to work a deal but expects to get less than the $36,000 he's after.\n\nAcross the country, SUV resales have hit the wall. The gotta-have vehicle of 2000 has become the can't-get-rid-of for 2005.\n\nThe SUV sales dip particularly affects the largest of the large, a rotund roster of wheeled barges including the Chevy Suburban, GMC Yukon, Dodge Durango, Chevy Tahoe, Nissan Armada, Ford Excursion, Ford Expedition and Toyota Sequoia.\n\nThere's little relief in site from rising gas prices, with production and refinery capacity along the Gulf Coast stunted by Monday's catastrophic blow by Hurricane Katrina.\n\n'The surge in trade-ins due to the employee purchase plans â€” and the corresponding increase in supply â€” has accelerated large SUV depreciation,' said Rosten, the pricing manager from Edmunds.\n\nLuxury SUVs like Hummer H3s and H2s or Cadillac Escalades are less prone to fluctuations in gas prices. Consumers willing to pay more than $50,000 for a car aren't likely to be bothered when gas goes up a quarter, said Kevin Cox, general manager of the CarMax in Norcross.\n\n'If you're looking for an H2, that's a person looking for a Corvette,' Cox said. 'It's not like they're looking for an H2 and leaving with a Cherokee.'\n\nStill, while not 'dramatic,' he does see a 'nudge' downward in the interest for large SUVs.\n\n'When it comes to SUVs, if your lifestyle says you need an SUV, then you may not get an 8-cylinder but you may just get a 6-cylinder or a bigger sedan,' Cox said. 'Gas is definitely a factor, but I still see there's a lot of soccer moms or soccer dads who need a bigger SUV.'\n\nCanton home builder Hal Woods is selling his own Chevy SSR performance truck as well as a 2004 Cadillac Escalade SUV owned by his boss. He's posted both online. He's bought a classified ad. The interest for either after two weeks?\n\n'You're it,' he tells a reporter. 'Absolutely none. It's a wonderful time to buy. It's a horrible time to sell.'\n\nPrivate sellers are further hampered when competing with dealers, who can make up profits on finance packages. Many consumers trying to sell their roadway titans may owe more than they're worth, a pinch that only worsens their financial pain.\n\n'Most dramatically impacted by the high gas prices are families who really stretched their budgets to take advantage of high incentive programs,' said JesseToprak, senior analyst for Edmunds. 'They can barely afford the payments of the car in the first place. They're feeling the pain the worst, expeically if they're commuting 30 to 40 miles a day.'\n\nSummer has something small to do with the suppression of large SUV sales, Toprak said. Demand will pick up in December with the first winter storm, when consumers crave the traction of 4X4 vehicles.\n\n'It's a need issue,' Toprak said.\n\nBack in Roswell, even over the weekend, no one called the Curnicks. Everyone wants to see the 1978 280Z they're selling. No one's interested in the Expedition.\n\n'I'm going to let it ride,' Michael Curnick said. 'I don't have an escape plan.'\n\nCould it be that the honkin' big SUV has one foot in the vehicle boneyard? One seed for thought: Fill it with dirt and it could become the only planter box in the neighborhood with ABS brakes and seating for nine.\n\nSUV GAS MILEAGE\n\nWorst gas mileage, SUVs Vehicle City MPG Highway MPG \n1. Mercedes-Benz G55 AMG 12 14 \n2. Land Rover Range Rover 12 16 \n3. Mercedes-Benz G500 13 14 \n4. Toyota Land Cruiser 13 17 \n5. Lexus LX 470 13 17 \n\nBest gas mileage, SUVs Vehicle City MPG Highway MPG \n1. Ford Escape HEV 33 29 \n2. Toyota RAV4 24 30 \n3. Ford Escape 2WD 24 29 \n4. Mazda Tribute 2WD 24 29 \n5. Subaru Forrester 23 30 \n\n\nSource: www.fueleconomy.gov \n\n\nUSED SUV PRICES\n\n July 2004 July 2005 Change \nUsed car industry $10,881 $10,570 -2.9% \nUsed, large SUVs $16,357 $15,543 -7.1% \n\nSource: Edmunds.com\n\n \n\n