Do the math before trading SUV for smaller car

by Jim Pinkerton (jmpinkerton@wsbt.com)

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SUVs and trucks have moved to the back of car lots as demand has dropped because of higher gas prices. (WSBT photo)

By Jim Pinkerton

Story Created: Jul 28, 2008 at 5:49 PM EST

Story Updated: Aug 2, 2008 at 10:03 PM EST

SOUTH BEND — With gas prices near record highs, people are looking for ways to save a buck wherever they can. Some are trading in the SUV for something more fuel efficient.

Drive by a car dealer's lot these days and you may notice something a little different. SUVs have moved from the prime curbside spot to the back of the lot.

"Six months ago, we stocked sport utilities, pickup trucks, four wheel drives, and now it's all fuel economy, four doors, hybrids," said Tim Martin of U.S. 31 Auto Sales.

Martin says it's a trend he's seeing at all his car lots: People looking to save money by buying something more fuel efficient.

At just about any car dealer you go to these days, there are deals to be found, but the experts say before you trade, you better do the math.

Saint Mary's Economics professor Claude Renshaw says someone who drives 12,000 miles a year in a 15 mile a gallon SUV would be using 800 gallons of gas. Switching to a 30 mile a gallon car would cut that in half. At $4 a gallon, the savings would be $1,600 each year.

"To make a special purchase with the idea of saving gas may not be worth it. It's too long of a payback period and that doesn't even include things like interest, maintenance on the vehicle and things like that," Renshaw said.

Renshaw says it may be better to stick with the SUV unless you're in the market for a replacement car anyway.

Martin and Renshaw agree that the people who stand to benefit from the changing taste are larger families who haven't been able to afford an SUV.

"This would be a terrific time to get that. I'm sure the price on those vehicles is severely depressed over what the normal use and age patterns would be," Renshaw said.

Martin says his sales people sometimes have problems helping people trade down because the value of SUV has dropped so much while the cost of the smaller cars has gone up.

And there's more to figure into those calculations than just the fuel savings and depreciation. Insure.com released a new study last week that says switching to a smaller car can actually increase your car insurance bill.

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