Usually right about now, car dealers start buying four-wheel-drive vehicles at Manheim’s Metro Milwaukee Auto Auction to beef up their inventories for the coming winter season.
Not this year, however, according to a report in the Milwaukee Journal Sentinel.
“I think everybody’s very cautious about buying a larger SUV right now. They’re great vehicles, but they do use more gas, and I think that’s where people are concerned,” said Dennis Worthy, general manager of the auto auction near Caledonia.
Worthy said prices for bigger used SUVs have fallen as demand has waned, but prices for smaller, fuel-efficient used cars have increased.
The lack of interest in gas-gulping used SUVs is just one sign that rising gasoline prices – which might climb further because of the BP pipeline problem in Alaska – are changing the market for cars. Full-size SUVs have been a key factor behind the surge in towable RVs over the past decade.
Smart Motors Inc., a Toyota dealership in Madison, has had a shift in buyer interest, too. Three years ago, about 3% of its yearly sales were gas-electric hybrid vehicles. Now, general manager Allen Foster said, hybrid sales account for 20% – one of every five vehicles sold.
But perhaps nothing spells out more clearly the impact of $3-plus gas than the July statistics from the National Automobile Dealers Association. Sales of large new SUVs were down 19% through the first seven months of 2006, and sales of new hybrid vehicles were up 27%.
“That certainly reflects consideration of fuel prices and the expectation of what fuel prices are going to be,” said Paul Taylor, chief economist for the association.
Even though sales of big SUVs are dropping, it’s way too early to start writing an obituary for SUVs, others contended. Not everybody wants a smaller vehicle, and many still consider the convenience and their personal needs – such as roominess – worth the cost of the gas it takes to keep an SUV or a bigger vehicle running.
“People make adjustments about the prices of gasoline in the context of all the expenses associated with buying and operating a new car,” Taylor said.
John M. McDonald, a spokesman for GM in Detroit, said the volatility of gas prices and higher interest rates – which increase the monthly payments for people who would prefer a bigger SUV but could function just as well in a lower-cost car – have hurt some SUV sales. But he said there still is a strong market for smaller SUVs and the large luxury SUVs, vehicles that are being built with better fuel efficiency.
“We’re covering all the segments,” McDonald said.