DETROIT — High gasoline prices may take a bite out of the value of used large SUVs, according to Reuters.
The value of used large SUVs has been falling the last few years and the decline has picked up speed as gasoline prices have spiked, analysts said. More worrisome, however, are the vehicles coming off lease.
For consumer leases, a vehicle's residual value is set when the agreement is first signed. If the vehicle is worth less than what was initially estimated, automakers may be forced to take the loss. For large SUVs, analysts said those losses could be $3,000 to $6,000 per unit.
"The automakers are going to take a hit," said Alex Rosten, an analyst with Edmunds.com, an automotive information Web site. "As long as the incentives on new large SUVs and trucks stay as high as they are, there will just be less incentive to pay a premium for the same vehicle of an older model year."
Sales of new full-sized SUVs through August were off almost 11 percent to 429,508 units, according to research firm J.D. Power and Associates. Their share of the overall U.S. auto market had shrunk to 3.63 percent from 4.23 percent last year.
"People really finally got the message in this country and they are going to abandon (large) SUVs in droves," said Peter DeLorenzo, consultant and publisher of autoextremist.com.
However, Tom Webb, chief economist at Manheim, the used-car auction house, said the number of leased vehicles has declined since that practice peaked in the late 1990s. "The number of those vehicles that are actually out there on leases is lot fewer than it was," Webb said. "Plus, when those leases were written they had better contract residuals in them, so they will have a less negative exposure when they come back."