Even as the auto industry heads into an era of smaller, more fuel-efficient vehicles, the classic SUV is making a splash in the used car market.
Why? Sales and prices are up. The hoopla surrounding the latest new vehicle introductions hasn’t dampened the appetite for the hulking behemoths and their aging technology. Nor have the headlines about electric vehicles, fuel cells and hybrids.
"The demand for SUVs is huge, and I can't get enough of them,” said Doug Gough, sales manager at Redford, Mich.-based Midwest Auto Auctions, one of the nation’s old public auction companies. “If I got 100 of them, I could sell them in 30 days.”
It could be the SUV’s last hurrah. In the new car market, automakers have continued to drop old-style SUVs from their line-up and add more car-like, fuel-efficient crossovers.
If overall sales figures are any indication, they certainly made the right decision when they began embracing crossovers a decade or more ago. Crossover sales surpassed regular SUV sales in 2006, and have continued to grow. The successes have ranged from luxurious Audi Q7 to the diminutive, trendy Nissan Juke -- along with scores of other models in between.
Future auto historians won’t have much difficulty settling the question of how the crossover managed to seize the market from the SUV in a few short years: Once most SUV owners realized they didn’t spend much time venturing into the wilderness or towing 5,000-pound loads, they were ready for a crossover.
Yet the SUV’s heavy-duty character is precisely its appeal today. Many people still want -- or need -- to haul a load, tow a trailer, or take a two-track to their cabin or a trout stream. The classic SUV has higher ground clearance and is more rugged than a crossover. Taking a crossover into the bush can be a bit like taking your dad’s Oldsmobile.
"Say you are a fisherman and you have a 23-foot boat. You are not going to pull that around in your Ford Escape," Gough said. To be sure, you may have to put up with an extra 600 pounds in vehicle weight and a 10 mpg deficit on the highway if you were driving, say, a 2008 Chevy TrailBlazer instead of a 2011 Chevy Equinox. But that hardly fazes the current generation of SUV fans, Gough said.
“Even when you are talking about the bigger gas guzzlers, people want them.”
SUVs More Popular Than Ever
And they apparently aren’t holding back. The number of used SUVs sold in the country's top 210 markets rose 46 percent between January and October of this year, according to Bandon, Ore.-based CNW Market Research.
But their popularity has had a side effect. Prices for used SUVs have risen sharply in the past two years, outstripping the increase for crossovers by far, according to AuctionNet, which compiles data from car auctions.
Between July 2008 and in July 2010, the average sales price for SUVs one- to five-years-old climbed from about $13,000 to about $22,000. By contrast, crossovers rose from about $14,000 to $18,000 in the same period. This was admittedly a time of generally rising used car prices, but SUVs outpaced every other vehicle category.
Strangely enough, in January 2009, at the very depths of the financial meltdown, used SUVs began costing more than used crossovers on average.
SUV fans are literally paying the price. Several years ago, a buyer could find a ‘98 or ‘99 Suburban for $3,500, Gough said. "But that deal doesn't exist anymore. Those cars are bringing in $5,500 or $6,000."
So, people have to compromise. To drive the price down, they may buy a fairly new model -- but with far more miles on it than they originally intended, Gough said. Or they will buy an older model. “That way, they stay within their original budget.”
Alec Gutierrez, chief analyst for vehicle valuation at Kelley Blue Book, saw used SUV prices rise over the first eight or nine months of 2010, in part due to a “general lack of supply.”
Research The Top 20 Selling SUVs
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Since new vehicles sales were slow over this period, buyers were supplying few SUVs and other vehicles as trade-ins.
“Two years ago, SUVs were lasting anywhere from 45 to 60 days in used car markets," said Art Spinella , CNW’s president. "Today they are lasting anywhere from 25 to 30 days."
How Government Intervention Brought About Interest
The federal “Cash for Clunkers” program last year also set the stage for the current shortages and price increases, Gough said. It took nearly 700,000 vehicles off the market -- including many SUVs. That may have just increased buyers’ sense of urgency.
"Consumers may believe they will have less choice of models in the future," said Paul Taylor, chief economist at the National Automobile Dealers Association.
As they grapple with shortages and rising prices, they may be surprised to learn that they aren’t just competing with private customers like themselves.
Consumers, dealerships and exporters, for example, compete head to head for the same vehicles at public auctions, Gough said.
“They all have their fishing poles in the same pond and there are only so many fish.”
So when you buy a used SUV from a dealership, one of its agents may have outbid a consumer or an exporter to get it onto its lot in the first place.
Vehicle exports have also tightened up the used SUV market, Gough said. “There’s a huge demand for these vehicles overseas," he said. “A lot of people are shipping them and making a lot of money.”
SUV fans shouldn’t expect relief from the waves of new vehicle introductions in coming years -- in general, SUVs are expected to become even more car-like.
For example, the new Ford Explorer is basically built on the Taurus platform, Spinella notes. And even crossovers are shrinking. The already diminutive Ford Escape will be smaller for 2012. The same is true for the Ford Edge in 2014.
One reason is that automakers have to comply with the next change in Corporate Average Fuel Economy (CAFE) standards. While they haven’t been finalized, figures as high as 62 mpg have been floated in Congress.
“We don't know what the impact’s going to be on vehicles when those standards hit,” Gutierrez said.One thing is certain, though: The production of a few million SUVS isn’t likely to help automakers meet them.