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

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

Are you referring to Tundras? ;)

Reply to
Mike hunt

Nah, the GM/GMC/F-Series.

Reply to
Jim Higgins

Reply to
Mike hunt

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