If you think manufacturer incentives on trucks and SUVs are pretty good right now, you’re correct. But if you take into account the extra incentives individual dealers are adding, buying a truck or SUV right now could save you a huge amount of money.
The downside is that the dealers are the ones taking the hit, doing whatever they can to move the 2008 inventory off their lots. The Wall Street Journal reports that additional dealer incentives are making the price of some SUVs and trucks 50% off the original sticker price. At Zangara Dodge in Albuquerque, N.M., a 2008 Dodge Ram pickup now sells for $15,000, down from a sticker price of about $30,000.
Another example of this trend is at Independence Hummer in Charlotte, N.C. Customers there can get up to $11,000 off a 2008 Hummer H2 and $10,000 off a smaller H3. The deals essentially wipe out any profit the dealership would make on the vehicles, said salesman Karl Logan.
So if the dealerships aren’t making a profit at all on the sale of these vehicles, how are they staying open? The story also reports that on average, dealers more than doubled their net loss to $136 on every vehicle they sold during the first four months of 2008, compared with $61 a year ago, said Paul Taylor, chief economist for the National Automobile Dealers Association.
Dealerships are actually losing money to sell an SUV or truck. In the new era of $4 a gallon gas, unfortunately, we can expect to see more dealers closing their doors. SUV’s and trucks were once huge profit-makers for dealers and manufacturers, but as more American’s can’t afford the gas to fill the tanks of these vehicles, dealers don’t really have a choice but to take the loss.