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Re: 'Like house of cards,' used trucks fall

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
Reply to
Mike hunt
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Don't forget to get the bankruptcy filing kit and learn to love your negative equity.

Reply to
Jim Higgins

I'm waiting until next week, when they'll sell for just $1 above the cost of the fuel left in the tank. ;)

Reply to
beerspill

Why? Do you need a truck in your business?

Reply to
Mike hunt

This is indeed the time to buy a used truck or SUV - if you need it. All the soccer moms who used to transport their seven-year-old and his ball to games have suddenly discovered that they really didn't need the Lincoln Navigator or Chevy Suburban or Ford Excursion (with its V-10!) to ferry junior about and it's just as easy with a Honda Fit or Yaris. Only trouble is that her family owes more on th behemoth than it's worth, and they're stuck with it. Too freakin' bad. Only trouble with buying a new truck or big vehicle is that there's so much profit packed into it. Oh, you think $40 grand is too much for a truck? We'll give you a $3000 rebate and it'll only be $37 grand! (or about twice what it's worth to start with.)

Reply to
mack

Has it occurred to you what will happen to the price of midget and small cars when the manufactures no longer have the profits from the big cars and trucks that have been supplementing the cost of making the midget and small cars? LOL

Reply to
Mike hunt

I see GM is going to raise their prices 3 1/2 percent for the new models. I really don't care what happens to the domestic big three, since they've dug their own grave, and have been doing just that for years. They're burning through money as fast as our forces in Iraq, with even less progress. Unless they can modify their contracts with UAW to cut down on the retirement benefits of workers who no longer work for them, just collect pensions, the only auto companies in this country who may survive are the ones who make domestic versions of Japanese and German cars.

Reply to
mack

In case you haven't notice dummy ALL manufactures, currently selling 09 models, have upped the price over the 08s they replaced. Every manufacture has always raise prices DURING the model year as well when costs go up

In case you haven't notice dummy ALL manufactures, currently selling 09 models, have upped the price over the 08s they replaced. Every manufacture has always raise prices DURING the model year as well when costs go up

What makes you think ANY manufacture will make midget and small cars in the US when they can make them off shore much cheaper LOL

Auto companies in this country who may survive are the

Reply to
Mike hunt

Actually, price decreases often occur during the model year as well.

For the same reasons they make mid-size and large cars in the U.S. when they can make them off shore much cheaper. Well of course you've got two errors of fact in that statement. First of all, the place they can make them "much cheaper" isn't off shore, it's in Mexico, and perhaps Brazil. It's no cheaper to manufacture in Japan or Europe. Maybe China would be cheaper, though transport costs would eat up a lot of the savings, and it's unlikely that U.S. consumers would accept Chinese-made cars unless tehy were significantly cheaper.

Reply to
SMS

Sure, for those who need a good truck the price will continue to drop and the deal gets sweeter. But with housing/construction/consumers in the septic tank a lot LESS people are going to need trucks.

Reply to
johngdole

Wait another month and you'll have to pay to get the gas still in the tank. The truck will be free. ;) ;) ;)

Reply to
johngdole

Maybe it is time to cash in.

Ed

Reply to
C. E. White

Are you referring to Tundras? ;)

Reply to
Mike hunt

Define a lot less? The F150 is still selling at a annual rate of more than a half million and the end of the model year is not the time of year when most truck buyers by trucks. Those that need trucks will continue to buy the trucks they need in the fall

Sure, for those who need a good truck the price will continue to drop and the deal gets sweeter. But with housing/construction/consumers in the septic tank a lot LESS people are going to need trucks.

Reply to
Mike hunt

Apparently you don't know much about the business of building and marketing vehicles if that is what you believe. I worked for GM, VW and Ford over a period of thirty years in designing cars and later in retail for over ten years.

Nobody lowers the price at the end of the model year. They add some equipment to the cars that have increased in price during the model year and offer rebates but the never lower the MSRP.

The base retail value of any used car, of any brand, of any model year, is the SAME, not matter when it was purchased. If you drop the MSRP you kill the price of the whole model year.

Chrysler made that mistake >> In case you haven't notice dummy ALL manufactures, currently selling 09

Reply to
Mike hunt

Scott you need to hang on to it a bit longer. When they get old enough the start to go up. My '71 Pinto cost $1,885. My antique car insurance carrier ups the value annually. They have it up to $10,000! Not to long ago it was only $6,000. At the time my '83 Mark VI, which cost $27,800, was $9,000 and now they have it at $11,500.

Reply to
Mike hunt

You didn't say that. You said that manufacturers always raise prices during the model year.

Yet lowering of the MSRP has often occurred when they set the MSRP price too high for market conditions, and not just via rebates but actual reductions in the MSRP. GM did this as recently as 2006, see "

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". Toyota has done it as well, at least in Canada, see "
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". I don't know where you got the idea that they don't lower MSRPs mid-model year. Clearly you don't know much about the vehicle industry in North America, despite having worked in that industry for forty years.

Wrong. As usual. You really need to do just a little research before posting. It took me about 15 seconds to locate news stories that confirmed what I knew to be the case.

Reply to
SMS

You don't know what you are talking about. Manufactures add FREE options that raise the BASE price by the value of the options, which are then discount on the sticker, that never lowers the MSRP no mater what you think.

Another think I saw them all do when I was Group Sales Manager for one of the largest Mega-Dealership Groups on the east cost, was issue new price lists on vehicles on dealer order in May, going into at the end of the model year build time, when we could no longer order some models.

When the new model prices were introduced they could report a LOWER percentage increase over the previous model year. THEY all do it. We sold just about any brand you can name in our 28 dealeships in six states.

S>> Apparently you don't know much about the business of building and

Reply to
Mike hunt

As the links I provided prove, you are absolutely wrong about manufacturers never lowering the MSRP mid-model year. Read and learn.

Reply to
SMS

Ya' right LOL

Reply to
Mike hunt

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