High Fuel Prices Soften Demand for Most SUVs

“This has a direct impact on fleets. If a model is hard to sell in the new-vehicle retail market, it’s also hard to sell in the used-vehicle market,” said Darrin Aiken, assistant VP vehicle remarketing for Wheels Inc. “The resale market is soft not only for large SUVs, but also mid-size SUVs,” added Aiken. “Smaller SUVs continue to do well, but not as well as a year ago.”

Resale prices for passenger minivans continue to be in the doldrums, as they have been for the past four years, due to low consumer demand. “The exceptions are the Chrysler and Dodge minivans with the Stow ’n Go feature. Consumer preference has shifted from minivans to crossover vehicles,” said Aiken.

However, resale values for mid-size sedans are exceeding those of same time last year. Compact cars seem to be the main beneficiaries of higher fuel prices. “Prices for small cars are phenomenal, but most fleets do not have very many of these vehicles,” said Aiken. Looking ahead to 2007, Aiken foresees an increased inventory of fleet vehicles in the wholesale market. “The 2005-model year was a huge year for fleet purchases, and these vehicles will start to enter the wholesale market in 2007,” said Aiken.

In addition, the volume of repossessions is increasing, retail leasing is growing, and the rental industry is acquiring more risk units, most of which will be sold at auction.

Historically, higher vehicle inventories have exerted downward pressure on resale values.

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Originally posted on Work Truck Online