With dealers starting to refuse gas guzzlers for trade-ins, monster, expensive-to-power vehicles are going to drop in price. Buying someone else's problem can make for a good deal for the buyer.
But even if these vehicles could be traded in, trading an SUV for a fuel-efficient vehicle may not make financial sense. (It does make environmental sense, but all this does at the moment is subsidize someone else who doesn't care.) The pittance that one gets for their inefficient vehicle, and the premium that one must pay for an efficient one, means that the gas prices have to be much higher than they are for it to pay off, or that it will take several years for savings to be seen.
So, it may turn out, after doing the math, that efficiency doesn't appear to buy you that much in savings.
However, there's a big assumption that isn't really considered in this kind of analysis: It assumes that you'll be able to buy as much gas as you need. We can do this now. It hurts our wallets a lot more than it did a few years ago or even two months ago, but we still can fill up our vehicles, large and small, 24 hours a day, seven days a week.
The analysis falls apart if you have enforced shortages (rationing) or real shortages (production not keeping up with demand). What if we could only buy ten gallons of gas per week? That's:
- more than a full tank for a Geo Metro (7 gallons),
- not quite a full tank for my Toyota Corolla (13.2 gallons),
- about half a tank for a Jeep Cherokee (20 gallons), and
- less than a third of a tank for a Hummer H2 (32 gallons).
Even if you had someone pay you $1,000 to take their H2, you wouldn't be able to go very far under rationing like this.
This is just an example of rationing for illustrative purposes — it will probably come in other forms — but the basic idea to bring home is that there will be a time when gasoline will be unavailable at any price for the general population. (Well-connected individuals will still be able to get as much as they want.) At this point, the only viable option is to get by using as little gas as possible. At this time, the fuel-efficient vehicle will be worth the premium, and monster trucks will be good only for museums or for scrap metal.
Yes, but taking advantage of this opportunity to buy a 35k gas guzzler for 15k can also be a very good idea. For example, if you are thinking about buying a minivan and don't drive a lot of miles, than you can get a much better deal on a large SUV. This opportunity will soon be gone as prices of materials are going up very fast. After 8-months of low prices, the supply will fall with demand and the next year large SUV's will cost a lot more money.
Maybe even consider the current market an investment opportunity. Consider buying 10 SUV's, storing them for one year and selling them on the market for a lot more.
It's still good to buy one if 1)You won't be driving it often or 2)You actually need it. I've always wanted to own a pickup truck so that I can stop paying to rent trucks like twice a year. A more industrious person could also make a little more money by doing small-hauling jobs. I'd only take it out when I need it though and use my decently efficient car for everything else.
I bought a new 2008 Versa last year and put in less than 500 miles a month sometimes driving it for weekly errands only to make it run. We use our Civic more often as that gives us 32-36 miles vs. the Versa's 26-30 miles. When we need a Van we borrow from our friends. I am looking at trading this Versa for a van. The gas cost is definitely affordable for me, do you think there are people that will swap my Versa and pay a price difference for a guzzler.
If your buying the guzzler as a second car, this is the time to do it. New cars dealers have some great incentive because they can't get rid of their allotment and used car dealers are sitting on inventory they can't sell.
If your a multiple car family this is a great time to get the larger vehicle you couldn't get before. Just make sure you have an economical vehicle to do the long hauls in.
Buying one of those gas guzzlers is getting very temping. I live in a northern climate and drive between 5000 to 8000 miles a year. Comparing a newer honda civic at 17000 miles (30/40 mpg) to a used expediation 2000 with 68000 miles (14/16 mpg) what I am finding in the difference in purchase price of 10,000 dollars really isn't enough to offset the better gas mileage of the civic. Whatever I spend in gas for the Expediation would be halved with the civic, so if I saved 1500 a year with the civic it would take me 6.5 years to recoup the savings from the gas costs. I would rather buy the better car for gas mileage, but is I can find a good car for 1/3 the cost I can't ignore it.
We're looking at buying a Honda Pilot (20 mpg), because we have a large family (well, we will someday) and need the room. Comparing the price to a minivan that gets the same mpg, we can save a lot of money by buying an SUV. And since it will be used a kid hauler (I'm a SAHM with kids who ride the bus and walk to the park, I don't drive much) the gas won't be horrible (I hope not anyway!).
If you're worried about fuel shortages (rationing), you want to buy a diesel vehicle.
25 year old Mercedes diesels are cheap and still get nearly 30 mpg highway.
Why diesel?
Because it's the only liquid fuel you can store in large (several hundred gallons even in the city) quantity safely and legally (can't do that with gasoline – too volatile)
Home heating oil is little more than on-road diesel plus dye (to show road taxes haven't been paid).
Buy a *new* "heating oil" tank (275 gallons), and make sure the delivery person knows to fill it full of on-road diesel, not home heating oil ("for my new generator, yeah, that's the ticket")
Then you have several weeks or months of fuel on hand in case of shortages.