Gas-Powered
Since peaking in mid-July, gas prices have been slowly inching downward. Meanwhile, vehicle resale values are starting to stabilize. Have we turned the corner on the sport-utility vehicle debacle?
Gas prices have dropped nearly 10% in the past month, to $3.71 per gallon on Aug. 18 from $4.05 per gallon on July 14, according to the U.S. Department of Energy.
And price declines for used vehicles at auction have slowed considerably. Here are some examples: The wholesale price for a midsize SUV was $8,520 in July, down just 1.1% from June. For a mini SUV, the price increased 2% in the month, to $9,529, according to ADESA Analytical Services statistics. In May, by comparison, auction prices had dropped 9% and 4.7% for the midsize and mini SUVs, respectively.
I think a big part of the problem with these so-called “gas guzzlers” is their perception in the marketplace. If all consumers hear about are high gas prices, they are bound to avoid SUVs. But once that hype starts to wear off, the market can start to normalize again.
Do you think the trend will continue to improve? I think we’re on the right track.
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SUVs will recover after the fuel spike has either dissipated or become the new “normal.” However, I think the kind of SUVs people buy were changing before the spike and will continue to shift in its wake.
Saab’s 9-7x is a very typical example of the me-too vehicles developed at the height of SUV mania. A big, body-on-frame SUV that’s mostly a Chevrolet Trailblazer underneath, the 9-7 was created primarily as a stopgap to give Saab dealers something to sell in the face of customer defections to the Acura MDX, Volvo XC90, and others. The 9-7 didn’t get a warm reception mostly because it was so unlike anything else Saab has ever made. But it probably did keep at least a few customers in the fold.
Aware that tastes were changing towards crossovers and more efficient SUVs, Saab was already developing a crossover when the 9-7 was launched, but that vehicle, a version of the Subaru Tribeca, was cancelled when GM sold its shares of Subaru in 2005. The 9-7 will be replaced in late 2009 by a smaller, more efficient crossover (the 9-4x) that also has more in common with the other Saab products. It may also offer a Hybrid option.
That seems incredibly well timed given how circumstances have so radically changed since the 9-7’s introduction in 2005. Consider, however, that the 9-4x has had a four-year gestation, more if you count the cancelled Subaru-based project.
That there is increasing interest in crossovers suggests that the public still wants these vehicles, so the market will recover – it’ll just be populated by slightly different products.
First part… no, they were C& not C11. They are doing what they are doing because they can. Under C11 they CAN circumvent franchise laws under BK law. I assert that even though they can, it is counter productive and will hurt them rather than help. It obviously hurts dealers and their employees. The task force just does not understand this, but they are the ones driving the bus. But socialism doesn’t enter into the equation. That’s the part I don’t understand.