IE 11 is not supported. For an optimal experience visit our site on another browser.

Biggest losers can make great car bargains

Deals on slow-selling models that don’t get high gas mileage can sometimes be enough to offset the cost of the extra gas they use. Here is a look at the top 10 sales losers of 2008.
Image: Hyundai Tucson
The Hyundai Tucson saw its sales drop 65 percent in September, and sales of the crossover SUV are down 49.9 percent this year.Hyundai
/ Source: Forbes Autos

With gas prices as low as they've been in a year and automakers eager to make deals on slow-selling minivans, pickups and sport utility vehicles, now could be a good time to consider one. The savings in rebates on some models could even offset the extra gas they use.

Six out of the top 10 vehicles with the biggest percentage losses in sales this year through September are midsize SUVs. Models like the Land Rover LR3, with a sales drop of 62.3 percent, according to Autodata Corp., and Jeep Commander, down 54.8 percent, have lost favor with buyers largely because of their poor gas mileage.

But bargain hunters might find that discounts on out-of-favor SUVs will pay for the higher cost of gas, says Mike Luckey, an independent analyst with Luckey Consulting Group in Kinnelon, N.J. (Click on the “slide show” link below to see the full ranking of biggest sales losers and current incentives on each vehicle.)

"We had an irrational — well it wasn't irrational — call it a knee-jerk response earlier this year, when everybody stopped buying these vehicles," Luckey says.

A conservative estimate is that the extra gas an SUV typically uses compared to a car could add $1,000 a year in expenses for gas. That's assuming gas at $4 per gallon and driving 15,000 miles a year — even though gas is now below $4, and most people drive fewer miles per year, making the actual gas expense even lower. Over three years of ownership, a $3,000 discount on the vehicle price could make up the difference. "Why not do it?" Luckey asks.

Big discounts are definitely available.

General Motors is offering $5,000 in customer rebates or interest rates as low as 0 percent on the Hummer H3. The H3 has the ninth largest sales drop this year, at 48.2 percent.

Jeep is offering $4,500 off the Commander, as well as some 0 percent loans.

Though the midsize H3 and Commander only muster around 14 miles per gallon in mixed city and highway driving, there are bigger gas-guzzlers out there, like full-size SUVs, for instance. So it might seem odd that many of the models with the largest sales drops aren't full-size SUVs, but midsize ones.

"For the midsize SUV, many of those have no more functionality or capability than a nice, multifunctional [crossover] vehicle or a sedan that might be $10,000 less," says Alexander Edwards, president of the automotive group at Strategic Vision, a San Diego-based market research firm. "On the other hand, if you have six children, your vehicle choices are pretty limited."

That could help explain why sales of some midsize SUVs are down even more than bigger SUVs: Midsize SUVs are too small for those who genuinely need the capabilities of a full-size SUV, and too large for someone who can get by with a smaller, more fuel-efficient alternative in these economically tough times, Edwards says.

A similar dynamic might explain why one midsize and one compact pickup made our list of top 10 biggest losers, but no full-size pickups did. Sales of the midsize Dodge Dakota are down 47.7 this year, and sales of the compact Mazda B Series are down 51.3 percent. That is enough of a drop for the Dodge Dakota to rank at No. 10 on our biggest-losers list and for the Mazda B Series to rank at No. 6. Both are overshadowed by more-popular models.

But the bigger pickups are suffering, too. Transaction prices for large pickups are down almost $3,300, to an average of $27,328, according to the Power Information Network, which collects data from dealership finance departments and is a division of industry research firm J.D. Power and Associates. That's comparing prices for July through September 2008, versus the year-ago period, says Tom Libby, J.D. Power's senior director of industry analysis.

The same logic applies to used trucks, says Tom Kontos, executive vice president of customer strategies and analytics for ADESA Inc., an auto-auction company in Carmel, Ind.

Auction prices for used trucks have rebounded somewhat but are still down from last year. Savings on these vehicles can more than make up for higher gas prices, he says. "People should do the math."

The biggest sales loser of all this year isn't a truck or SUV, but a minivan: the Hyundai Entourage. Despite being both safe and affordable, with a starting price of $24,595, its sales are down a staggering 72.2 percent this year, according to Autodata.

That's because the Entourage has three strikes against it: minivans in general aren't doing well, but even if they were, Hyundai is not known for minivans, and the brand is not highly regarded.

In uncertain economic times, shoppers want to make the easy choice, says Strategic Vision's Edwards. "The trouble with a lot of those [worst-selling] vehicles is that you're having to make too many compromises, whether it's paying more than you'd like, or taking a risk on the brand, or the perceived quality, or whether it's 'green.' It just becomes too difficult a decision."

But it's still a buyer's market overall. U.S. auto sales fell 26.6 percent to 964,873 in September, according to AutoData, and they're down 12.8 percent through September from the year-ago period, to a total of 10.8 million. That means car companies and their dealers are highly motivated to sell.

So despite the credit crunch and worries over not being able to get a loan, the vast majority of auto-loan applications from buyers with good credit are still getting approved, according to CNW Marketing Research in Bandon, Ore. Those with excellent credit scores had their car loans approved 79 percent of the time in September, and those with good credit had their loans approved 76 percent of the time.

Only one car made our list of biggest sales losers: the Lincoln Town Car, which is part of a shrinking breed of large, rear-wheel-drive, domestic luxury cars. Its drop in sales of 54.3 percent is way above the industry average of 4.1 percent for all cars and lands it in the fourth spot.

We compiled our ranking of the top 10 models with the biggest percentage sales losses this year through September using figures from Autodata. Click on the “slide show” link above for the full list.