The era of $3 gas is displacing the era of the SUV. Consumers are lining up to try to unload their big SUVs for fuel efficient vehicles. Trouble is no one is buying, at least not now.
The resale value of used SUVs has dropped ten percent and dealers are offering as much as 30 percent less than blue book value for proposed trades. The sales of new SUVs are off as well, tumbling 50 percent in September.
The Big Three summer sales extravaganza had already driven down the resale value of most used vehicles while the gas price run-up is hitting large SUV very hard.
As a telling sign of the times the Toyota Prius Hybrid outsold every large SUV on the market except the Chevy Tahoe in September.
AutoPacific, a California consumer research firm found that 28 percent of SUV owners said they will shift to another type of vehicle for their next purchase. Forty-four percent for the people responding said they would switch to small cars.
Low trade-in values will mean higher car payments. A fuel efficient hybrid can turn out to be more expensive to operate even in an environment of rising gasoline price if one pays too much for it.
Many SUV drivers are not alone in their desire to unload their vehicle. Ford, the second-largest US automaker, is offering rebates of as much as $3,000 on its sports-utility vehicles as the company seeks to revive sales.
The shift in consumer preferences presents a huge marketing challenge for GM, which is still counting on large SUVs to help spark a turnaround for the company.
Both Ford and GM rely on SUVs to make up for money-losing passenger car operations. The two automakers are already dealing with losses in North American automotive operations caused in part by years of sliding market share.
For the most part, that market share has shifted to Asia and Japan where Toyota and Honda or the leaders in hybrid technology and production.
Ford is preparing a major financial restructuring that is likely to be announced later this month and includes several plant closings and thousands of job cuts.
GM is negotiating with the United Auto Workers in an effort to cut health-care costs.