A dealer reports: "Ford just re-released 'Employee Pricing' on their Ford Trucks (plus up to $3500 cash back). GM just released up to $4000 additional owner loyalty bonus cash on their trucks and SUVs (in addition to the up to $2000 already on the hood). Normally, these incentives give the dealer enough cash to throw at trade-ins to at least make a deal possible. Not profitable. And not painless for the customer. Merely do-able. Well, it ain't enough. In our meetings with manufacturer marketing teams and dealer advisory committees (where the smell of fear is palpable), the stories from the field are apocalyptic. One salesman stood up. 'I had a customer with a two-year-old Expedition. Crazily-enough, he wanted a new F-150. I tried everything, every trick in the book, and I couldn't put a deal together. And he was my BROTHER!' (Read: I was taking a loss, he was taking a loss, and the numbers were cutting us both so bad we couldn't deal). Another meeting, another dealer. 'I brought a year-old GMC Denali to auction. Priced it at rough wholesale book, minus seven grand. I was prepared to accept any offer up to 10 grand behind rough wholesale book. I was taking to take a tremendous beating to unload it. And it didn't sell. Didn't get an offer of any kind.' (Read: You can't give 'em away. Wait; you cannot PAY people to take them.) Now that the wealthy (who can afford the beating) and the quick-movers (who have already glutted the market) are in their Civics, Camrys and Accords; consumers in full-size trucks and SUVs are pretty much owners-for-life. And dealers, who must move new metal, can't do anything to help them. Not even if it's their brother."
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Scrap dealers will be happy to have em, at least metal is appreciating in value..
Ouch..
Earlier today I read an article on CNN.com about just this. One guy described how he buys the trucks for cheap and then exports them to Central and South America where the gas is still cheap and demand is high. I guess there’s always a way to turn a profit, even in times like this.
I noticed the other day that Dodge has $5k-$8k back on the ram. I noticed a 3.7L version of the ram with AC & some other options for $12,997 NEW in the local paper. I don’t know all the details, but I thought it was interesting. I’d love to have something to tow my motorcycle around in, and 12997 is pretty cheap.
Today I saw a mitsubishi raider for $11,997.
What do people pay for these in a large/big city area?
Do you guys think they’d take a check for $9k if I’m willing to take it off the lot?
Does anyone know if I would be able to easily tow 2 sportbikes around in the back of a pickup? I have also found “mounts” for them (no tiedowns required) that you can screw into the bed for $500’ish which makes loading/unloading super easy. Would save garage space as well. Considering my car doesn’t get much better gas mileage than the light pickups it’s not like I’d be spending more gas….
Can you imagine the deal to go down between a prospective buyer and a salesman?
Buyer: I’m interested in any Chevy Malibus you might have.
Salesman: I’m sorry, we won’t have any here until about Monday, but I have quite a few Tahburbans I could put you in…..for half off too!!!
Assuming you intend to keep it forever, and you don’t intend to put a lot of miles on it, and you can live without a warranty, why not wait until Chrysler goes belly-up and get one at the going-out-of-business liquidation sale.
I noticed a 3.7L version of the ram with AC & some other options for $12,997 NEW in the local paper.
Nobody would’ve wanted one of those even when trucks were selling better. Fullsizers with the V6 are usually stripped-down units for the fleets.
Does Frank have the Canadian numbers? I’m not seeing these trends in Western Canada.
Robstar I don’t know about the $9000 for a truck, they probably would be losing a ton of money that way, but I bet if you wait until closer to the end of the summer if gas prices do get real close to $5 they will be begging for a customer like you.
Fitting 2 sport bikes in the bed of a truck will be tight. I have seen trucks on the interstate with 2 sports in the bed, but any bump looked like they would end up damaging each other. It also depends on the bikes in question, if they are both liter bikes I would almost say no, at least so they dont get scratched, but 2 600’s or 750’s might work on wheel chocks, I would still use tie downs to make sure they didnt shift from side to side bashing into each other. Also are we talking about a fullsize truck or something Tacoma Frontier sized. It would be tight fitting 2 bikes in the back of my dad’s Frontier and I have a standard Thumper from the early 80’s without any body work.
If you are already willing to spend $1000 on 2 wheel chocks you should just spend a little more and get a dual bike trailer, safer and easier to load and unload. You might be able to pull it behind some fullsize cars, I’m just hinking it can’t be more than about 2500 lbs to tow.
My policy is to lease anything over $30k – too much downside in resale value to buy them.
My wife drives a leased Tahoe (it goes back next summer). Given the gap between it’s future market value & the the leasing bank’s book value, is there a mini-sub-prime meltdown in auto financing companies looming?
There’s also lot of leased vehicles on the market that will compete as CPOs with new cars/trucks. Since the OEMs can’t cut CPO volumes, they’ll find themselves in an even worse situation with respect to loan origination if overall demand continues declining.
Why would somebody trade a 2 year-old expedition for an F-150? He’s had it for 2 years, and it’s as good as new.
And trading it for what’s basically the same thing but with a bed instead of a roof seems to make very little sense.
Guys thanks for the comments.
I was thinking maybe I could screw these into the pickup bed:
http://www.pit-bull.com/trailer-restraint-types.shtml
I only really have small cars (2000 neon and 2005 WRX STi) and I don’t really think those are rated to tow anything, AFAIK, which is why I think it would be nice to have a cheap vehicle rated for towing.
I am open to other suggestions, but to not have to drag something behind me is worth alot to me, especially with vandals in the city & only having 1 garage parking space. I still need to measure the garage to make sure everything would be height/ok for this plan, anyhow…
Wow, glad I didn’t go for that F150 a few years ago…rationality kicked in and I bought the Mazda 3 wagon. Although, a nice F150 for rare 2nd vehicle trips would be handy…but I just bought a mint Volvo 760 Turbo wagon for $1100 so I’m all set on the 2nd vehicle too.
Hate to be smug, but I don’t really feel bad for all those who “had to have” a large vehicle without the neccissity. Especially all of these Idaho-ians who sold the farm.
What I can’t figure out is why people are willing to take a $10,000 hit in the shorts on SUV trade ins to save $100 bucks a month in fuel costs.
I also leased my truck and it’s also due next summer. ’05 2500HD lease buy out value is $13.9k and I bet next summer when it goes back I probably won’t keep it but pick up a smaller v8 truck on the cheap – unless I low ball GMAC and get that truck for less than $7k (who knows maybe the value would have dropped by then).
@Turbo G: I wonder the same…people think too short term, which also explains their vehicle selection and many fads that occur in our society (as well as other countries).
@ AKM :
June 12th, 2008 at 2:45 pm
Why would somebody trade a 2 year-old expedition for an F-150? He’s had it for 2 years, and it’s as good as new.
Because he’s a well-trained consumer?
Sure the gas prices hurt me.
I’m kinda poor.
But what does it say that the whole nation is freaking out, including mainstream, middle class business park America ?
Are we all that close to the bone ?
Here is the deal.
For years I was way ahead on operational costs with my used crusher. I get 14 mpg, do under 8k a year, and it rarely needs any repairs, and it was depreciating VERY slowly. Every year I did the math and was ahead.
I don’t know if that’s true now. Not because the fuel mileage, which really doesn’t add up to much, but because all of a sudden, my truck has depreciated like a yellow banana.
There’s good news though. I CAN own this truck for life. It will last that long. So, I will keep it. That’s the problem with selling new SUV’s. Our vehicles last, so us buyers of real SUV’s can wait to buy a new one for a loooong time.
powerglide, a large portion of America lives so far above their means that they were already stretched out before high gas prices hit. The average American is in debt (aka negative savings). The “middle class” is equally poor, they just have nicer stuff.
I know a couple that has a 60″ plasma, Harley Davidson, and VW GTI. And they’re making payments on them all (also $5000 upside down on the GTI).
If I had the dough would love to get a newer big SUV at a bargain price… but I’d have to get rid of the 2000 model (Expedition) I have now. So, I’ll just sit on it and use it for towing to livestock shows 10 – 12 times a year or so. Like Landcrusher, I CAN be a lifetime owner (have had an ’89 Ford full size Club Wagon van since it was new).
Turbo G,
It really depends on the distance they travel. That $100 dollars could be per week difference. I travel 35 miles each way to/from work (total of 70). If I had an SUV or large pick up you can bet that would be closer to $100 a week or more…or $400+ a month.
I’m trying to time the market right so I can get rid of the ’99 Suburban and pick up a new one.
I need to get it at rock bottom when the dealers are stuffed with 07/08/09 models but before the manufacturers radically cut production.
Isn’t the combination of low US Dollar and massive incentives making these SUV’s look might good to Europeans right now? Not every Euro lives in a city. It must be reaching a point where they could fly over, buy an American SUV, take it home and drive it with Euro fuel prices and STILL come out ahead.
Unless of course Europe has such high trade tariffs to negate all price advantages.
Robstar, you can tow two bikes with an STi.
http://www.iwsti.com/forums/732271-post13.html
Mj0lnir, if you don’t mind getting nasty looks and the occasional expletive…pick the truck you want, figure out how much you want to spend (not for that vehicle, how much period) and wave the figure under their nose.
Are we all that close to the bone ?
Yes
where the smell of fear is palpable
Robert, surely you can distinguish between fear and feces.
yankinwaoz,
The problem with buying a big US SUV in europe is several fold. Taxes, roads, repairs, etc.
OTOH, there are parts of the world that will likely be better prospects. Shoot, the folks in Cuba would like nothing better than a boat load of eighties SUV’s. Pretty similar to the cars they have now!
NickR:
Mj0lnir, if you don’t mind getting nasty looks and the occasional expletive…pick the truck you want, figure out how much you want to spend (not for that vehicle, how much period) and wave the figure under their nose.
Or move to Saskatchewan, where self-righteousness takes many forms, but not in vehicular choice.
Praxis> I have heard of people down the road having problems after towing alot with the STi. I don’t think subaru certifies that it can tow.
Robstar-If it’s going to be an occasional vehicle, buying a three or four year old model might be an even better deal. You probably won’t put enough miles on it for reliability to be a major concern (so an older vehicle would be ok), but if you think new full sized pickups are cheap, imagine how cheap used ones are.
We tend to have a short perspective.
Once upon a time, say in the 70s, pick-ups could be had cheaper than cars. A full size (only size) Blazer could cost more, given extra sheet metal and 4×4.
As they gained in popularity, automakers packed on bling and boy did they pack on the price. It’s hard to justify an SUV or pickup costing 2x or more the price of a car.
Carmakers got fat off the margin, and believe it there was a lot of per unit margin.
All that is happening now is that the price of SUVs and pickups are coming down to earth, to the market level their utility (and downsides) deserve. OK, maybe they are moving a little lower as an overreaction.
The pickup/suv bubble was due for a pop.
Next bubble due for a pop: $30k+ mid-size Accords, Altimas, etc. An 80% uplift from bottom level to top level of the exact same model is nuts. I expect the market to start to seize up at the higher end, as fewer people can afford (read, get loans for) 12k GPS devices, 6 cylinder engines, leather, and so on.
The market speaks. Americans can no longer afford to look just at the monthly payment, since they will find it harder to qualify for loans and rentals (er, leases).
Someone at work said it costs $60 to fill up their truck. I asked when it costs $80 or $100, will they consider selling it and getting something different. They said they hadn’t thought about it.
At some price point, it will be too much.
If it cost $200 to fill up your car?
ronin:
Well put. given the current market, GREAT, new family sized vehicles can be had for 22-25k. no need to spend more. The equipment level on these cars is way more than a driver needs…
I can’t wait to pick up a new F-150 or GMT-900 real cheap. I just don’t know how to time the market yet.
And what’s wrong with being an owner-for-life? I have long felt (contrarian that I am) that owner-for-life is how things should be, in general.
If a buyer cannot live with his car for life (meaning until the car is ten years old, at least) by himself or by passing it on for a nominal price within his family / extended family, he should really double-check what he is doing. He may not be doing the wrong thing, but odds are he is.
Buy for the long haul, and/or buy used so you can hit the ten-year mark more quickly. Do this unless you are filthy rich or buying well below your “affordability point” as it might be traditionally defined. To talk from experience, my car is a 14 year old Panther platform with over 180,000 miles on it — and I keep it because it works and has dual airbags, not because I couldn’t qualify for the payments on something newer or nicer if I went out and tried. When I’m up for a bit of fun, I rent a MINI and thrash it good.
Planning on a trade-in — relying on a trade-in — means putting your faith in strangers (i.e. faith in their willingness to take your car off your hands for a fair price when the time comes), and as we’ve seen, that faith is not always rewarded. That’s a bit of frugal “self-sufficiency” that should be second nature to most Americans, but seemingly isn’t. If current conditions persist long enough, though, we’ll re-learn our virtues and life will go on from there.
Robert, why the comment that they are all in “Civics, Camrys, and Accords?” The day I drive a Maytag (Camry) on wheels (in both the good and bad that implies) is the day I cease to call myself an auto enthusiast. There are plenty of other quality cars out there, too.
Landcrusher, you implied by your statement that SUV’s inherently last longer than cars. While I seriously doubt that to be true, I don’t have any source of information to back up either point of view. Has somebody out there seen a study indicating that a given type of vehicle outlasts the other?
Hey Guys,
I stopped by the “biggest dodge dealership in the midwest” (Sherman Dodge) and the lot was HUGE, full of pickups, minivans, and large vehicles in general. They actually ran out of space in the lot and are leasing ANOTHER entire lot that used to be a ford dealership…It had just sprinters, dodge based dump trucks, more pickups…and very few “cars”, and that is where the $12,997 RAM 1500 was.
I talked to the salesguy a bit (we got there late and I didn’t want to keep him late since I knew I wasn’t buying) and he took us to the 2nd lot and let me sit in it. Not bad….base sticker was at $21k or $22k and out the door was about $14.7. Not bad but I figure I”m probably better off looking for something for $7k or $8k that is 4 years old and buying a 2nd motorcycle.
What I did like is that cheapie had ABS, cruise control (steering wheel controls), 6 speed manual tranny, intermittent wipers, cd player and some other goodies. Only downside was the 6′ bed instead of 8. He told me if I told him in advance he’d have it dug out already for when I arrived so I could test drive it…..
May go back at end of summer to see if it’s still there.
golden2husky,
I admittedly am going on my personal experience that body on frame vehicles (which is all “real” SUV’s IMO) last longer and better than unibody. Part of it is simply the ability to rehabilitate the vehicle even if it succumbs to rust. In the case of my truck, it was simply overbuilt to a stupid degree.
I have seriously considered going out and getting a classic car that is body on frame and having it rebuilt with perhaps even a much newer engine.
There is no free lunch, so I would be giving up a lot of safety to get a really fun car with good performance AND efficiency. Take a car that was 150 to 180 hp new, put in something similar but modern that gets 220 with likely a bigger torque increase, and see what happens. Maybe even a new suspension if I have the cash.
I suppose we can’t hold TTAC accountable for having no institutional memory of the 20th century, but are we really at a loss for community memory of events 29 to 35 years ago? Everything expressed in Robert’s commentary has precedent in market behavior witnessed in the wake of the fuel shocks of 1973 and 1979.
Move along, folks. There’s nothing to see here.
Phil
The difference is that people were not as much in debt and leases were not as popular. I remember both the fuel crunch as well as the high inflation that followed. Its why I buy and generally keep my vehicles for 10 years anyway. Its why I save and am not an impulse buyer of consumer items. Its why I invest my diposable income in appreciating assets (rental houses) that are income producing. Its why my house and car are paid off, its why I don’t carry a balance on my ccredit card. Unfortunately the institutional memory of the general car buying public as well as the upper management of the detroit 3 that is is deficient here. I think TTAC and Robert are merely pointing out the lack of memory of the public ass well as the Detroit 3.
Sherman,
What I find amazing is that the no debt secret to financial success is no secret at all, but so few get it. People are all so sure that the wealthy are in on some big secret, when most of the actual wealthy have regular incomes and are willing to tell everyone how they did it for free.
I’ll take one, call me. Just take my car as a trade!