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The latest bubble to burst? Trucks and SUVs

Owners see trade-in value plummet as housing declines and gas soars

Add your pickup truck or SUV to the list of things like your stock portfolio, your 401K, and your house that aren’t worth what they were just a few months ago.

Used-car values are closely tied to new-car values. Thanks to $4-a-gallon gasoline, the bottom has dropped out of new-vehicle demand for pickups and SUVs. The housing bust has also hurt pickups directly, since many are bought for use in construction businesses. Those factors have had a corresponding effect on used-car values for those vehicles.

“I’ve never seen anything like it, where segments have fallen as much as they have and as quick as they have,” says Ricky Beggs, vice-president and managing editor of Black Book, a widely used industry benchmark for trade-in prices and used-car auction data.

For instance, according to Black Book data, the average trade-in value of a 2006 Chevrolet Tahoe, once one of General Motors’ top sellers, has fallen around 29 percent, or more than $6,000, since March. The Tahoe is a full-size SUV that also comes in a hybrid version.

Wholesale auction prices for used, full-size SUVs averaged $10,507 in June, according to Carmel (Ind.)-based Adesa, a used-vehicle auction company. That was down an average of $3,167, or 23.2 percent, vs. the year-ago month. Full-size pickups were down $3,203, or 27.3 percent, to $8,513, Adesa said. The fall in price for some individual models is much greater than the Adesa average.

Business Week

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