What will happen to gas guzzler prices when gas goes up this time?

February 18, 2011

I received the below question from a vAuto dealer, and my response follows:

Hi Dale, I had a question for you. Since there are fewer cars available today on the wholesale market and more competition for them on the wholesale market, how do you think the prices of SUV’s, gas guzzlers, and V8’s are going to react when gas hits $4/gallon? I remember back in 2008 (I think it was 2008) when gas passed $4/gallon in  and the dealers here didn’t want to touch big SUV’s with a 10 foot pole. I saw a bank owned 2006 Escalade with 60k go through the lanes and nobody even put their hand up at $11,000.

Do you think we will see the same type of huge depreciation trend happen again on V8’s and big SUV’s?


What would happen if another jumbo jet liner slammed into the Empire State Building tomorrow?  This would obviously be a horrendously tragic event, but would it have the same effect on the nation as the 911 attack?  The answer is that it would not.  Trauma is funny in this respect.  It never seems to have the same effect when it occurs the second and subsequent times. 

Having said this however, there is an undeniable inverse relationship between gasoline prices and gas guzzler values.  I don’t know exactly at what point it will kick in and to what extent, but it probably won’t have the same dramatic effect as it did the first time around.  To be sure however, keep your eye on the ball and adjust your swing accordingly.