TV COVERAGE

Gas prices drive up cost of smaller used cars

Mon, 18 Apr 2011 15:33:55 GMT

Gas prices drive up cost of smaller used cars

Higher gas prices are beginning to bite in new and unusual ways. Not only are prices going up at the pump, but they are being propelled upward for smaller, fuel-efficient vehicles on used car lots nationwide. At the same time, there has been a spike in drivers trying to unload their gas-guzzling SUVs.

Gas prices currently average $3.80 a gallon for unleaded regular, according to the AAA. That's up 37 percent since last Oct. 1. According to most experts, the stampede out of SUVs really begins when gas crosses the crucial threshold of $4 a gallon, which it has already breached in New York, California and Florida.

"Gas prices are definitely starting to ripple in the used car market right now," says Bill Visnic, analyst and senior editor at Edmunds' autoobserver.com. Visnic notes that in addition to the gas situation, the shortage of parts in Japan because of the earthquake and tsunami have added to pressure on car prices. In addition, the fact that the economy is improving is sending all used car prices higher, not just for small cars.

But smaller cars are taking the biggest hit. According to Edmunds' proprietary measure of car prices, a three-year-old Honda Accord has soared in value by 24 percent since last September. A similarly aged Hyundai Sonata is up 22 percent, the Honda Civic is up 13 percent and the Nissan Sentra has risen 12 percent.

"Particularly the Civic and Sentra are the standard bearers in the fuel efficient category," Visnic says.

Higher gas prices also affect the ways consumers think about a car purchase. While they might have considered a new car previously, the higher prices at the pump mean they are thinking more about used cars, driving up demand for those vehicles. "I may now buy a used car because I have to spend more for gas," he says.

So why are all car prices headed upward? Visnic says the rebounding economy is having a strong effect in that there are just more people shopping.

Interestingly, prices for used SUVs have not come down as much as small cars have gone up. That's because they tend to be a lagging indicator of consumer demand. People who already own SUVs can use online calculators such as the one at edmunds.com to figure out how long it will take to pay for the cost of trading in a larger car for a smaller one. For example, a driver may still have a $20,000 loan on an SUV but a dealer will only offer him or her $18,000. Then there's an extra $2,000-$4,000 for the newer smaller car. With higher gas prices, how many months of driving do you have to do to make that extra $4,000 for the smaller car worthwhile? It's a complex calculation and many people decide it's not worth the bother yet.

But that's not true of leased cars, which tend to be treated more like rentals than purchases.

According to John Sternal, vice president of leasetrader.com, which helps people transfer existing car leases to new owners, they are noticing a spike in listings for larger, fuel guzzling cars. But they haven't reached the panic stage that occurred in 2008, when there was a rapid runup in gas prices to a national average of $4.11 a gallon.

For example, Sternal says, the cash incentives that owners offer to induce people to take over their lease have increased from an average of $1,075 to $1,250 for SUVs and six-cylinder or larger cars. Listing for these large cars have increased 5.3 percent since January. Search demand for large cars by potential owners has also fallen sharply.

On the other hand, cash incentives for Japanese economy cars have disappeared, down from an average of $450 in January. Listings for these cars have fallen from 19.1 percent of the total in January to 17.4 percent today — meaning that fewer people want to get out of their leases for small, fuel-efficient vehicles.

"We are seeing more and more people follow a similar trend to what we saw in 2008," Sternal says. "But $4 a gallon this time around feels much different than back in 2008: the jobs picture seems to be turning around and consumer confidence seems to be strengthening. If you're driving an SUV you're saying 'this stinks, but I can weather this storm a little better than in 2008.'"

Sternal says the situation in Japan has had an immediate impact on people with leased cars because they saw retail showrooms cut their incentives after the earthquake because of anticipated shortages and they followed suit when it came to listing their leased vehicles.

"That makes it a little bit more of a seller's market," Sternal says. "The cash incentives dried up almost at the same time they did at the retail dealership level."

Car Leases On the Rise

Fri, 08 Apr 2011 17:15:04 GMT

Car Leases On the Rise

If you`re looking to buy a new car, you may want to consider leasing. Twenty-two percent of the cars sold nationwide today are leased, according to leasetrader.com. It`s a big climb since the banking crisis when car leases significantly declined.

Twenty percent of EIDE Ford`s business this year has come from leases.

"The programs that the manufacturers are putting together are very strong," said EIDE Ford General Sales Manager Jesse Peterson. "The monthly payments are a lot lower, and also the benefit of the consumer with the lease is that you have a shorter period of time that you`re committed to the car. "

EIDE Ford has leased about 30 cars since the year began. That`s a big change from last year when they leased a total of nine vehicles for the entire year.

"As a result of a lot of the leases being reduced over the last few years, we`ve found that there`s a big shortage in the market of good, quality used vehicles, so what we`ve been doing is being a lot more aggressive in acquiring vehicles from customers," explained Peterson.

Since there are fewer used cars in the market right now, Peterson said consumers have an advantage.

"Your car is now worth a lot more than it was two or three years ago because they`re a lot harder to find.
Schwan GM Auto Center has also seen an increase in leases, with more than 20 percent of their new car business coming from leases.

"In the past year, manufacturers have really incentivized the lease again. Makes sense for a lot of buyers. It gives them more options," added Jayse Schwan, Schwan GM Auto Center`s new car manager.

When these leased cars come back to the dealership in the next two to three years, auto dealers said it will be good for their used car inventory, which is in demand.

The vice president of leasetrader.com says that because banks have stabilized to the point that they`re more confident in writing aggressive deals, this helps consumers looking for a good deal on a Car Lease

SUV, Truck Sales Rise Despite Gas Prices

Wed, 30 Mar 2011 18:06:20 GMT

SUV, Truck Sales Rise Despite Gas Prices

SAN ANTONIO -- Pain at the pump is felt most by those with big trucks and cars.

Manny Martinez said his car is a beast at the pump, but like many drivers, he's not willing to part with it for a more fuel-efficient vehicle.

"It's a hog," said Martinez. "It's got a big V8 in there, but you know what, I don't care. I'm going to enjoy my car. Let it cost what it costs."

Daryl Mank, with Red McCombs Toyota, said most people aren't giving up on guzzlers. He said even big trucks are still selling strong.

"In San Antonio, they love their trucks, so the Tundras and Tacomas are still moving.The SUVs, the ones we have, they're continuing to move, so we're not seeing any problems with gas prices," said Mank.

Mank said truck and SUV sales are up right now, thanks to a rise in the economy.

However, he said there is a change the habits of car shoppers, who are leaning toward more fuel-efficient cars.

"It's all about fuel economy on cars," said Mank. "We do have a selection of hybrids and they are moving a little bit better now, obviously, than they were before the gas prices."

However, statistics show consumers who give up on bigger cars to save on gas are generally not satisfied in the long run. A recent survey by leasetrader.com found that 60 percent of drivers who traded in their SUVs for more fuel-efficient cars in 2008 returned to their less efficient cars.

Americans Still Hungry For SUVs, Pickups

Thu, 10 Mar 2011 17:23:22 GMT

Americans Still Hungry For SUVs, Pickups

NEW YORK (CNNMoney) -- Rising gas prices did not keep Americans from buying large pickups and SUVs in February, according to sales results from leading automakers.

Industrywide U.S. auto sales shot up 27% compared to a year ago according to sales tracker Autodata. That's well above forecasts of about a 19% increase. The sales rate was the best since the Cash for Clunkers program, and at that pace, sales could reach 13.4 million vehicles over a full year.

The month was particularly strong for the sale of light trucks, such as pickups, vans and SUVs, even in the face of higher gas prices. Truck sales rose 32% and had the best sales rate since before the financial meltdown.

"We're seeing consumer demand coming back stronger than we anticipated, along with loans and leases becoming easier to get," said Jesse Toprak, analyst with TrueCar.com.

Toprak said the two types of vehicles getting the most attention from buyers are small cars and full-size trucks, demonstrating that while fuel economy is becoming more important, there's still a lot of pent-up demand for larger vehicles.

The increase in gas prices isn't making the impact on buyers it did even a few years ago, said Paul Ballew, chief economist for Nationwide Financial.

"Keep in mind, we reset our expectations. Five years ago, $3 a gallon was 'Oh my goodness.' Now it's more of a norm," he said.
$4 gas? Depends where you live

The real benchmark is more like $4 a gallon, according to Sergio Stiberman, CEO of LeaseTrader.com. He pointed to a survey of those turning in leased trucks, which showed only 16% did so because of high gas prices in February, compared to 78% in summer 2008, when gas hit a record $4 a gallon.

"During the uptick, concerns and complaints heat up when we pass certain price benchmarks, but widespread behavior doesn't actually change until we reach $4.00 per gallon," he said.

AAA's estimate for the average price of a gallon of regular gas stands at $3.375, up 9% in the last month. The price hikes are accelerating as unrest in the Middle East raises crude oil prices, causing a 6% rise in just the last week.

General Motors (GM) reported sales jumped 46% from a year earlier, with strong demand for the Silverado pickup truck leading the way. GM's top-selling pickup posted a 60% gain in sales, and an 84% increase in retail sales to consumers.

"There's a lot of speculation about what fuel prices will do for pickups, but these people are buying for needs," said Don Johnson, GM's vice president, U.S. Sales Operations. "I don't see that slowing."

GM executives said they're also seeing strong demand for small cars. Sales of the Chevrolet Cruze were up 32% compared to year-ago sales of the Cobalt model it replaced. And 46% of overall Chevrolet sales were 4-cylinder models, up 6 percentage points from a year ago.

But Johnson said he doesn't think gas prices at this level will eat into industrywide sales, and that even a steady rise in gas prices should leave sales relatively unscathed. He's more worried about a sharp price spike that will put some buyers on the sidelines.

"Nobody knows what will happen with fuel prices for sure, other than the fact that there will be volatility," he said.

Sales gains were more modest at Ford Motor (F, Fortune 500) and Chrysler Group, but both reported strong sales in some large pickup and SUV models. Ford sales rose 14%, helped by a 139% jump in sales of its redesigned best-selling SUV, the Explorer. The strong demand has resulted in a shortage of Explorers in showrooms.

George Pipas, Ford's director of sales analysis, said that while there was an increase in small-car sales in the first two months of the year, new offerings in the segment likely had as much to do with the shift as gas prices did.

Ken Czubay, Ford's vice president in charge of U.S. sales, said even truck buyers are becoming more conscious about mileage, with 30% of Ford's truck sales now fuel-efficient six-cylinder vehicles rather than the traditional eight-cylinder engine.

Chrysler Group reported a 13% gain in sales, almost entirely due to the 81% jump in sales among its Ram truck brand. The redesigned Jeep Grand Cherokee SUV also posted a 31% increase in sales.

Toyota Motor (TM) reported a 42% jump in sales, despite a new problem with recalls. Improved sales in small cars were a key element, with the Prius hybrid posting a 70% sales increase. The company was also helped by a 57% rise in SUV sales and improved sales of its Tundra full-sized pickup.

Buckling Up in the Back Seat

Mon, 28 Feb 2011 17:44:25 GMT

Buckling Up in the Back Seat

Buckling up your seat belt in the back seat could become just as important as buckling up while sitting in the front seat of a car.

More and More states have put laws into place requiring rear-seat passengers to wear seat belts.

But that still doesn't necessarily mean everyone is buckling up.

LeaseTrader.com polled more than 1,000 men and women who live in states with and without rear seat belt laws.

In states that don't have a rear seat belt law in place for adults above the age of 18, like Florida, about 10% of men and about 16% of women polled say, they wear seat belts in the back seat.

"I was thrown from the back seat and almost went into the windshield, so I know first hand how important it is to have my children buckled in at all times." Said Florida driver Michael Bundick.

The poll also shows that the number one reason people don't buckle up in the back seat is because they simply forget.

"I think that it's everyone's responsibility including the driver and everyone in the car, to ensure the responsibility of those riding in the car." Said local teacher Michael Simmons.

According to the poll, the driver did not remind back seat passengers to buckle up about 75% of time.

LeaseTrader.com on Business Week

Fri, 26 Nov 2010 16:10:59 GMT

LeaseTrader.com on KTVK-PHX

Tue, 16 Nov 2010 17:59:24 GMT

LeaseTrader.com on KTVK-PHX

LeaseTrader.com on FOX & Friends

Mon, 15 Nov 2010 22:23:14 GMT

LeaseTrader.com on FOX & Friends

FOX and Friends, the popular morning television show on FOX News Channel, interviewed LeaseTrader.com executives about a new trend concerning adults asking their adult children to co-sign on a lease. With millions of adults feeling the effects of the housing collapse and underwater mortgages, more adults are turning to their adult children for help when shopping for a car. LeaseTrader.com works with people to transfer a lease to another credit-qualified person anywhere in the country.

LeaseTrader.com on CNBC SQUAWK ON THE STREET

Fri, 12 Nov 2010 21:40:21 GMT

LeaseTrader.com on CNBC SQUAWK ON THE STREET

Squawk on the Street, which is seen at 9:00am ET, is broadcast live at the New York Stock Exchange and hosted by Mark Haines (the original host of Squawk Box) and Erin Burnett. David Faber (who also hosts and contributes to his "Faber Report" segments) reports from CNBC Global Headquarters, while Haines and Burnett are in the "Squawk Nest," or "Luxury Box" (as Haines calls it) above the NYSE. Contributors include Melissa Lee, Bob Pisani (NYSE), Bertha Coombs, Scott Wapner (NASDAQ), Sharon Epperson (NYMEX) and Rick Santelli (Chicago Mercantile Exchange or Chicago Board of Trade).

First-time leasers making rookie mistakes

Thu, 11 Nov 2010 20:23:24 GMT

First-time leasers making rookie mistakes

More and more people are leasing cars these days. But many first-time leasers are making rookie mistakes.

When people shop for a new Car Lease, the majority tend to only look at the payment. Car leasing website LeaseTrader.com says many people fail to research the effect their new car will have on insurance premiums and coverage requirements. Company executives say a lease requires a certain amount of insurance that's often higher than a driver's previous coverage. And that's important to know considering leases make up more than 20% of all new car purchases for the first time in more than a decade.