Used Car Market Flooding with SUVs

Check out these statistics from a Boston.com article published this weekend:

In April, the average used SUV took more than 66 days to sell, at a 20 percent discount from vehicle valuation books, such as Kelley Blue Book, compared to 48 days and a 7.8 percent discount a year earlier, reported CNW Marketing Research, an automotive marketing research company.

And, as gas prices continue to rise, some people are clearly panicking:

Last July, 20-year-old Sannan Nizami, of Lowell, bought a 2007 Toyota 4Runner SUV for $32,000 when it cost about $65 to fill the tank. Six months later, as a gallon of gas soared to $3.50 and more, and tank refills climbed over $80, Nizami put the vehicle up for sale. He posted it online for $27,000 but received no responses for months. Frustrated and unable to afford prices at the pump, Nizami last month turned over the Toyota to a dealer who only sells vehicles from private owners. Nizami is still paying the $450 loan but now is bumming rides to work with a cousin and worrying about making enough from the sale to cover the car loan. "I didn’t think gas would shoot up this much. I’m willing to take a hit just to take the pressure off," Nizami said. "I’ll probably get a really cheap Camry or Corolla. Something that gets more than 18 miles to the gallon."

Aside from the obvious question of why this guy thought he could afford to buy a new 4Runner in the first place, maybe he should do some math before he panics. That "cheap Corolla" might get, what, 30mpg? If he drives 15,000 miles per year that means that he will save a whopping $1,200 per year at the current gas prices. If gas goes up to $5 per gallon, the savings would be around $1,700 per year. But does it make sense to take such a massive hit right now by selling the 4Runner and buying another car (which, of course, includes paying sales tax)? And that doesn’t even bring into consideration some modest mods he could do on his 4Runner to make it more fuel efficient.