Wednesday, June 4, 2008

Kar Karma?

Are people being punished for buying gas guzzlers? Maybe there is a god after all.

From SUV Drivers Looking To Downsize Are Hitting Financial Roadblocks:

PAUL KANGAS: Meanwhile, many consumers hoping to trade in big gas-guzzlers for more fuel efficient vehicles are running into a roadblock. Re-sale values on big sport utilities and pickups are plummeting. As Diane Eastabrook reports, those slumping values are creating yet another problem for the troubled auto industry.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Mike Sweeney is caught in an upside down auto loan. Sweeney bought this 2005 Dodge Durango last summer when gas prices were in the $2 a gallon range. Now that prices are double that, he wants to trade in the sport utility for a more fuel efficient vehicle. The problem is, Sweeney owes $17,000 on the Durango, but it's worth a lot less.

MIKE SWEENEY, SPORT UTILITY OWNER: Today I think the last time I looked at my blue book it was like somewhere in the 12s.

EASTABROOK: Actually a check on the Kelly blue book website, which tracks vehicle values, indicates the Durango is worth closer to $10,000. Analysts say Sweeney's situation isn't unusual these days. Soaring gas prices are dramatically driving down demand for big sport utilities and pickups, therefore, driving down their residual or resale values. Manheim Auto Auctions says in April the average resale value of full-size SUVs dropped 17.5 percent compared to the same month last year. The average resale value of full-size pickups plunged 15 percent.

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