Dealer Poncho Redfern sees big used trucks that were worth $20,000 just a few months ago valued today at $12,000. And he winces.
"It's not like prices are just a little soft," says Redfern, president of Thomason Auto Group, of San Francisco, which owns seven dealerships in California and Texas. "The values have dropped extraordinarily. We are having a hard time adjusting."
Many new-vehicle dealers grew accustomed to raking in big profits on large used pickups and SUVs. But now those trucks are sucking out cash as they gather dust.
Soaring fuel prices have toppled the market for big used trucks "like a house of cards," says Tom Kontos, executive vice president of analytical services for the ADESA auction company.
In the past three months, values of large used trucks have depreciated more than ordinarily would be expected in a year, according to CarMax Inc., the largest used-vehicle retailer in the United States. Some full-sized used trucks now fetch as little as half their wholesale book value.
Dealers say they can't offer customers much for trade-ins of big trucks — and some are refusing to take those pickups and SUVs at all.
Sales and prices of large used trucks continue to slump.
Last month, used full-sized pickups sold at auction for an average price of $9,343 — a 21.3 percent decline from May 2007, ADESA says. The average wholesale price of large SUVs plunged 19.7 percent to $11,271.
The market for big used trucks shifted "overnight," says Patrick Walsh, a Ford dealer in rural Atwater, Minn. "I don't think any of us were ready for that."