Sound like a great time to buy a new or used full size truck for those that need full size trucks
C. E. White wrote:
>> 'Like house of cards,' used trucks fall
>>
>> Donna Harris
>> and Arlena Sawyers
>>
>> Automotive News
>>
>> June 23, 2008 - 12:01 am ET
>>
>> Dealer Poncho Redfern sees big used trucks that were worth $20,000 just a
>> few months ago valued today at $12,000. And he winces.
>>
>> "It's not like prices are just a little soft," says Redfern, president of
>> Thomason Auto Group, of San Francisco, which owns seven dealerships in
>> California and Texas. "The values have dropped extraordinarily. We are
>> having a hard time adjusting."
>>
>> Many new-vehicle dealers grew accustomed to raking in big profits on
>> large used pickups and SUVs. But now those trucks are sucking out cash as
>> they gather dust.
>>
>> Soaring fuel prices have toppled the market for big used trucks "like a
>> house of cards," says Tom Kontos, executive vice president of analytical
>> services for the ADESA auction company.
>>
>> In the past three months, values of large used trucks have depreciated
>> more than ordinarily would be expected in a year, according to CarMax
>> Inc., the largest used-vehicle retailer in the United States. Some
>> full-sized used trucks now fetch as little as half their wholesale book >> value.
>>
>> Dealers say they can't offer customers much for trade-ins of big trucks -
>> and some are refusing to take those pickups and SUVs at all.
>> Sales and prices of large used trucks continue to slump.
>>
>> Last month, used full-sized pickups sold at auction for an average price
>> of $9,343 - a 21.3 percent decline from May 2007, ADESA says. The average
>> wholesale price of large SUVs plunged 19.7 percent to $11,271.
>>
>> The market for big used trucks shifted "overnight," says Patrick Walsh, a
>> Ford dealer in rural Atwater, Minn. "I don't think any of us were ready >> for that."
>>
>> Truck dump
>>
>> Wholesale prices of used big pickups and SUVs plunged by one-fifth last >> month.
>>
>> Change
>> AVG. Price FROM
>> MAY '08 MAY '07
>> Full-sized
>> pickups $9,343 -21.3%
>> Large SUVs $11,271 -19.7%
>> Source: ADESA Analytical Services
>>
>> Earnings plunge
>>
>> Late last week, Ford Motor Credit Co. said it will take a pretax loss
>> this year, mainly because of "further weakness in large truck and SUV
>> auction values."
>>
>> Last week, CarMax said its net income for the three months that ended May
>> 31 fell 55 percent from the year-ago period, to $29.6 million. Company
>> CEO Tom Folliard cited a 25 percent drop in wholesale prices of big
>> trucks in the quarter.
>>
>> The steep decline has continued in June, Folliard said. "This is the
>> longest-lasting depreciation of a large segment we've ever seen," he said
>> during an earnings call last week.
>>
>> DCH Auto Group, of South Amboy, N.J., owns 31 dealerships in California,
>> New York, New Jersey and Connecticut. Last year, sales of large pickups
>> and SUVs accounted for 25 to 30 percent of the private group's
>> used-vehicle sales. Now it's 15 to 20 percent, the company says. >>
>> "This collapse is a major issue for us," says DCH CEO Susan Scarola. >>
>> Big losers
>>
>> How wholesale prices of some used big trucks fell between January and
>> June. All vehicles are 2005 models.
>>
>> 15-Jun Jan. 1 CHANGE
>> BMW X5 4.4i $24,200 $31,400 -22.9%
>> Toyota Tundra Ltd. -
>> Double 4wd $16,525 $21,425 -22.9%
>> Ford F-150 Lariat -
>> SuperCrew 4wd $16,100 $20,500 -21.5%
>> Chevrolet Silverado -
>> 1500 LT Crew 4wd $15,675 $19,875 -21.1%
>> Infiniti QX56 awd $23,800 $30,000 -20.7%
>> Nissan Armada SE awd $15,150 $18,800 -19.4%
>> Source: Black Book
>>
>> Wreaking havoc
>>
>> Dealer Redfern says his dealerships typically have earned gross profits
>> of $1,500 to $2,000 on the sale of a used truck, not including finance
>> and insurance. On a new car, he says, the typical profit margin is $300
>> to $700. The collapse of used-truck sales is especially painful, he says. >>
>> "You can't outrun it in F&I," Redfern says. "There's only so much you can
>> honestly earn in that department. This wreaks havoc on the bottom line." >>
>> In May, an informal Automotive News survey found that one out of 10
>> dealers no longer accepted big SUVs and pickups as trade-ins. Other
>> dealers said they didn't have that option but were offering far lower
>> trade-in prices.
>>
>> "We can't turn them away," says Ken Cooper, sales manager of Alex
>> Chevrolet in rural Charles Town, W.Va. "We are in a small town. If it
>> gets around that we weren't taking trucks as trade-ins, we wouldn't be
>> doing any business."
>>
>> Customers who want to trade in a big truck for a fuel-efficient new car
>> are having the hardest time, Redfern says. Some new trucks carry factory
>> incentives of several thousand dollars, he notes, while the incentive on
>> a car might be just a few hundred dollars.
>>
>> Owners who owe money on their sharply depreciated big trucks are in for
>> an even bigger shock, he adds.
>>
>> "We see people with $10,000 in negative equity," Redfern says. "A dealer
>> does not have enough room to help the customer out of it."
>>
>> Alysha Webb contributed to this report
> And if the June sales forecast is fulfilled it will be a catastrophic
> decline in sales and value.
>
> --
> Civis Romanus Sum